break-even point is often mistaken for a point of return, however, these two concepts are completely different in nature.If the return is expressed in months and represents a time when the costs of the enterprise will be returned to the organizer of the project, the break-even point - this is something else entirely.Every organization has a volume of production, realizing that it does not receive income, but also does not bear the costs.
At this point, each additional unit sold product is already beginning to make a profit.It is an indicator called the break-even point.The formula is quite simple break-even point.It can be calculated in terms of production and in terms of money.When calculating the value of its cash is calculated by first dividing the value of the product of the profit from its sale, then the amount of fixed costs should be divided into the result.
If the break-even point is calculated in units, it is calculated by dividing the fixed costs of the profit from the sale of goods.The calculation of this indicator is very important.If return (profitability), the organization may have a vague expression (optimistic and pessimistic plan), the break-even point is calculated accurately.It has a precise expression without an estimate.This indicator addresses a number of problems and has several functions.First of all, it shows whether it is necessary to start production or other business.After all, market laws always work, regardless of what plans the entrepreneur.
If the market is too small or on the large number of similar goods, the company will be unable to reach break-even point, and certainly does not make a profit.Therefore it is necessary to calculate in advance.Revenue depends on the value of the product and sales.Break-even point allows you to calculate and adjust the figures.If you change one of them, you can change the second.However, the minimum index is always the one that is marked as the break-even point of the enterprise.If the company sells more products than noted in this indicator, it shows a profit.Profit margins are also calculated on the basis of this factor.
The break-even point is calculated all the costs incurred by the company.This is the cost of purchasing goods and taxes, and workers' wages or sellers.If the revenue can cover all these points, then it reached the same zero position when the company becomes self-sustaining.Work at breakeven no definite meaning.For the entrepreneur, it is important to receive income from launching business.Therefore, the organization of the case it is necessary to accurately determine whether the company has to cross that line.
To correctly determine this parameter, it is necessary to ask a simple question: where is the threshold at which the company will no longer make a profit, but at the same time and not suffer losses.It is known that reducing sales costs are also lower.So here it is important to count every little thing that will affect the profitability of the organization.This threshold is at all firms.Employers who organize the company, focusing on the mind, and not under the influence of desire, very carefully calculated risks.And those who give in to emotions, often find themselves out of the market.Break-even point as the point of profitability, a very important figure in the business plan.It pay attention to other potential investors and sponsors of the project, which is very significant return on investment and risk.In this businessman must be able to substantiate their findings that the company will be able to cross the threshold of breakeven existence.
