Why calculate the break-even point for a business start-up?


The creation of a company is not improvised and must be carefully considered if the future leader does not want to lose more money than he will earn. Among the data he needs to know is his company's break-even point. Presentation and method of calculation of this primordial element.
What is the break-even point for a company?
Before starting a business in a new business, every business creator needs to ensure that the business can be profitable as quickly as possible.
Thus, any good business plan must incorporate an essential notion: the break-even point. This is a key factor, since it defines the amount of turnover excluding taxes that a company must realize in a given period in order to reach financial equilibrium, that is to say So that revenues offset expenses. Once the break-even point is exceeded, a company starts to make profits.
Obviously, in order to define more personalized objectives, it may be wise to decline it in number of days of turnover or in quantity of products to sell to become profitable.
Note that the break-even point will be one of the main criteria used by banks to decide whether or not to grant a credit to a business creator.

Comments

Post a Comment

Popular posts from this blog

What are third-party accounts?

Image
In accounting, the accounts of third parties are in fact all the accounts of class 4 of PCG that is to say of the General Accounting Plan. For best accountancy training  Best school of accountancy In Pakistan .  Back on these accounts and their usefulness in accounting. This is an account belonging to class 4 of the PCG. To make this clear, this account has a number that begins with the number 4. The accounts of third parties belongs to the balance sheet accounts, and summarizes in a synthetic way all the interlocutors of the company . As soon as the company maintains relations with suppliers, customers, employees, social agencies, partners or the administration, the latter must necessarily appear in the accounts of third parties. What is the account of third parties? Third party accounts allow you to have a perfect visibility of all the transactions that come or go to the interlocutor. We will be able to note the advances and the installments of the orders, or the p...
Keep reading

Accounting for the centralization of cash

Image
The centralization of cash, also known as cash pooling or cash management, must be accounted for in a rather specific way. For accountancy training Best school of accountancy In Pakistan . Focus on this accounting operation! What is centralization of cash? It is a technique of treasury management of corporate accounts, belonging to the same group. In reality, this accounting operation will make it possible to optimize the needs and cash surpluses, the financial expenses of the group concerned, and to manage the financial risks . What are cash-pooling methods? There are two methods of centralization of cash which it is essential to know in the context of an accounting mission. First of all, the so-called physical centralization, that is to say, the transfer of funds between the companies and the central account, namely the centralizing account. The second method is that of centralization without the circulation of funds, which means that each company continues to operate wi...
Keep reading