Break-even analysis aloud

In the current conditions of brutal competition in the sales market, it is very important to conduct a break-even analysis on each business entity. Today, breakeven analysis of the enterprise is a very important management mechanism. It serves to correctly assess the financial situation that has developed in the enterprise. It includes measures to monitor the dynamics of financial indicators and to develop a set of measures aimed at the development of the company. In other words, in our time, breakeven analysis is the most necessary condition and the main driving force in the economic development of an industrial enterprise. On its basis, an economic strategy of stability and growth is developed, which allows successfully to exist both in the domestic and foreign markets.

In its practice, breakeven analysis is based on short-term resource planning. It is a study, analysis and planning of the acquisition of each unit of resources. This is done in order to know the potential benefits. And in the future - to produce and sell more products of its own production.

The activity of an industrial enterprise without the formation of profits and losses is called break-even. The received proceeds at this type of management first goes to cover all the necessary costs, and only then each unit of the sold products brings profit. The definition of the difference between all sold products and breakeven volume is called the profit zone. The higher the profit zone at the enterprise, the stronger is its financial position.

To study the dependence of the influence of the volume of production, the amount of fixed costs, the sum of the variable costs of obtaining profit, and came up with an analysis of the break-even production.

is he Is very necessary and appropriate not only for the correct management of the company's financial resources, but also:

-in modernization of production facilities or when creating a new enterprise;

- for the development of marketing strategies in the field of price policy;

-to develop new solutions related to the introduction of a new commercial product into existing production or the removal of an old product from the process line;

-if the output is changed;

The main aspect of breakeven analysis is the determination of the equilibrium point. In other words, it is the finding of such a volume of sales, in which the sales proceeds will be equal to the sum of all the costs incurred. The increase in this volume of sales will bring further profit, and a decrease - will lead to losses and financial collapse.

The break-even analysis of the enterprise includes several stages

-The first stage assesses and studies the strengths and weaknesses of the business entity from the point of view of foreign and domestic policy. Minimize all possible costs, depending on the technical, production equipment and personnel. The activity of competitors is analyzed, the percentage share of the sales market controlled by the enterprise. Consumer preferences and other various components are taken into account.

-On the second stage, a probable forecast is made about the effect of changed prices on the cost factor of the output. The dynamics of statistical indicators for the recent period is considered. Measures are discussed with unfavorable price changes.

- At the third stage, the cost of products is calculated. The amount of work in progress is planned. All fixed and variable costs are considered. The demand and the planned volume of production in working capital and fixed assets are determined. The corresponding financial investments are planned.

-In the fourth stage, the break-even point is determined . Moreover, in the organization of the production process, implying the production of several types of products, different prices for the nomenclature, different variable costs and a different share of the possibility of covering a mixed amount of costs are necessarily taken into account.

-On the fifth and final stage, the final preparation of the financial plan takes place taking into account the changed prices and the volume of production calculated on the basis of the break-even point.