Post by asadul5585 on Feb 22, 2024 10:09:32 GMT 3
The financial break-even point is nothing more than identifying the minimum revenue that is necessary for a business to be able to cover its expenses and, thus, remain operational. To do this, it is necessary to equalize income and expenses. Any revenue that exceeds expenses will be an effective profit, just as any revenue that falls below expenses will mean a loss. Thus, this is an indicator that helps entrepreneurs determine how much of a product or service needs to be sold to generate income capable of covering fixed and variable business expenses. Using this method, it is possible to reach the number that can help a company grow, because, by knowing it, everyone in the business will have the basis to be able to carry out actions in order to achieve the objectives.
What is financial break-even point It is one of the important indicators for a company because it shows managers the minimum revenue necessary for the business to be able to maintain itself. When expenses are greater than revenue, this means that the business is generating losses, as well as the opposite: if revenue is greater than expenses, the company is Kuwait Mobile Number List generating profit. To discover it, it is necessary to consider fixed expenses, which are those that generate money outflow. It is also necessary to take into account income and variable expenses. It is important to highlight that, in this indicator, the depreciation of the company's assets should not be considered, which is the loss of appreciation of an asset, which is usually recorded as a cost. That's why some people also call this indicator cash balance point, as it only checks what is available in the company's cash flow. Another term used for this indicator is break even point .
E-book achieving zero default Difference between accounting, financial and economic break-even point It is interesting to highlight that there are three relevant financial indicators that have different functions, which are the accounting, financial and economic balance point. Finance is our focus, but let's talk about the other two as well: accounting and economics, which are often confused with it. While for the accounting break-even point all operating costs of the business are considered, including fixed, variable and asset depreciation, regardless of profits or losses, the economic break-even point seeks to know how much income is needed to cover the costs of a business and generate the minimum desired profit.
What is financial break-even point It is one of the important indicators for a company because it shows managers the minimum revenue necessary for the business to be able to maintain itself. When expenses are greater than revenue, this means that the business is generating losses, as well as the opposite: if revenue is greater than expenses, the company is Kuwait Mobile Number List generating profit. To discover it, it is necessary to consider fixed expenses, which are those that generate money outflow. It is also necessary to take into account income and variable expenses. It is important to highlight that, in this indicator, the depreciation of the company's assets should not be considered, which is the loss of appreciation of an asset, which is usually recorded as a cost. That's why some people also call this indicator cash balance point, as it only checks what is available in the company's cash flow. Another term used for this indicator is break even point .
E-book achieving zero default Difference between accounting, financial and economic break-even point It is interesting to highlight that there are three relevant financial indicators that have different functions, which are the accounting, financial and economic balance point. Finance is our focus, but let's talk about the other two as well: accounting and economics, which are often confused with it. While for the accounting break-even point all operating costs of the business are considered, including fixed, variable and asset depreciation, regardless of profits or losses, the economic break-even point seeks to know how much income is needed to cover the costs of a business and generate the minimum desired profit.