3rd Bac - Equilibrium point and profit margin

The analysis of the viability of an entrepreneurship project takes shape when the entrepreneur performs calculations on the determination of the equilibrium point according to this it will be possible to know if the projected sales cover the expenses and costs of the business that is going to be created.

Equilibrium Point

The equilibrium point is the level of production and sale that the project must reach to fully cover its costs and expenses, it is the point where total income is equal to the sum of all fixed and variable costs and expenses that the entrepreneurship requires.

The equilibrium point calculation is information that can be used for different situations such as: support for determining the sale price, promoting the definition of the company's cost structure, helping the knowledge of the minimum quantities to produce and sell in order not to lose or gain in the business, guides to the location of the impact that it generates on the level of financial profit, each additional unit that is sold above the breakeven point, among the most relevant.



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