Post by account_disabled on Mar 9, 2024 3:25:25 GMT
Well-known variations. They are: financial break-even point and economic break-even point . Financial break-even point: the difference between the formula for this indicator and the calculation of the accounting break-even point is the exclusion of fixed costs, since the important thing here is to identify the money that comes out of the company's cash flow; economic balance point: this indicator represents the monetary correction that needs to be evaluated together with fixed expenses. In its formula, the opportunity cost is added. Well, with the difference between the three clear, we can talk about pef again! Know the importance of learning about pef to calculate the financial break-even point, it is necessary to consider three factors: fixed costs: fixed costs are the bills that your company must pay, regardless of the level of operations it has. For example, condominium rent, employee salaries, water, electricity and internet bills, raw materials, etc.; the contribution margin: finally, the contribution margin is.
Completely related to the gross revenue from sales of your company's products or services. It can also be used to arrive at a sales price result for the merchandise. Variable expenses: variable Bank User Number Data expenses are different from fixed costs, as they only take into account the moment of production of a certain product or service. The raw materials for your merchandise, for example, can be considered variable expenses; based on these three factors, it is possible to get an idea of the value of the financial break-even point. Furthermore, you can understand the amount of sales that must be made so that all costs and expenses are covered, resulting in greater profitability and profitability. See what the financial break-even point looks like the financial break-even point (pef) – or cash balance point – is also to present the total value of sales necessary.
For the organization to pay the bills and profit from that value. With this balance point, all recorded revenues and expenses that do not represent a disbursement or cash entry are removed from the calculation. This way, the indicator becomes compatible with the organization's cash flow. This is because the pef calculation does not consider those expenses that will not leave the cash flow. In other words, this is seen as an advantage of the pef, as it demonstrates how much is necessary to be sold for the profit to be equal to zero. However, the pef approach looks directly at short-term objectives. Therefore, the break-even point does not prepare the company for future situations, such as provision disbursements or possible exchanges of machinery and equipment. Learn how to calculate the financial break-even point to reach the accounting, economic and financial.