Economic foundations of the theory of break-even of sksit enterprises. Enterprise break-even analysis Margin of financial strength

Break even - this is the volume of sales at which the income received provides reimbursement of all costs and expenses, but does not provide the opportunity to make a profit, in other words, this is the lower limit volume of output at which profit is zero.

The break-even point is characterized by the following indicators:

1. Critical				Fixed costs for sales volume
(threshold) volume
sales, pcs.
				per unit of production
2. Threshold rent-
				Critical sales volume, pcs. × Price
whiteness, rub.
3. Financial reserve				Revenue from real				Profitability threshold
strength, rub.				tions, rub.				ness, rub.
4. Safety margin				Volume of sales,				Critical volume
ness, pcs.								We eat sales, pcs.

Profitability threshold- this is such revenue from sales at which the enterprise no longer has losses, but does not yet receive a profit. Financial strength margin- this is the amount by which a company can afford to reduce revenue without leaving the profit zone.

Let us give the calculation of the break-even point using the data in table as an example. 2.14:

Critical					100 million rubles.
volume of sales					(386 – 251) thousand rubles/pcs.
					740 pcs. × 386 thousand rubles/pcs.			285.7 million rubles.
profitability
Financial reserve				386 million rubles. – 285.7 million rubles.				100.3 million rubles.
strength
					1000 pcs. – 740 pcs.
security

Thus, with a sales volume of 740 pcs. and sales revenue of 285.7 million rubles. the enterprise reimburses all costs and expenses with the income received, while the enterprise's profit is zero, and the margin of financial strength is 100.3 million rubles.

Initial data for calculation		Table 2.14
Index		Indicator value
Sales revenue, million rubles.
Variable costs, million rubles.
Fixed costs, million rubles.
Profit, million rubles
Price, thousand rubles/pcs.
Sales volume, pcs.
Average variable costs, thousand rubles/piece.

The greater the difference between the actual production volume and the critical one, the higher the “financial strength” of the enterprise, and, consequently, its financial stability.

The value of the critical sales volume and the profitability threshold is influenced by:

▪ change in the amount of fixed expenses;

▪ the value of average variable costs;

▪ price level.

Thus, an enterprise with a small share of fixed costs can produce relatively less products than an enterprise with a larger share of fixed costs in order to ensure break-even and safety of its production. An enterprise with a high share of fixed costs should be much more afraid of a decrease in production volume.

16.3. Financial stability of the enterprise. Leverage

Leverage is an indicator characterizing the relationship between the cost structure, capital structure and financial result. There are three types of lever:

operating;

financial;

conjugate.

Operational (production) lever (OP) – this is an indicator of potential

tional possibility of changing profits due to changes in the cost structure and sales volume:

		Gross Margin
						Price – Average Variable Cost
per unit =
							Profit per unit
products

(Gross margin is the difference between sales revenue and variable costs).

Operating leverage shows by what percentage profit will change if sales volume changes by 1%.

For example, sales revenue at an enterprise is 400 million rubles; variable costs – 250 million rubles; fixed costs – 100 million rubles. Then the gross margin is equal to 150 million rubles, profit is 50 million rubles, and OP = 150 million rubles. / 50 million rub. = 3.0.

Thus, if sales volume decreases (increases) by 1%, then profit will decrease (increase) by 3%.

The effect of operating leverage comes down to the fact that any change in sales revenue (due to a change in volume) leads to an even stronger change in profit. The action of this effect is associated with the disproportionate influence of fixed and variable costs on the result of the financial and economic activities of the enterprise when production volume changes.

The force of influence of the operating lever shows degree of business risk, those. the risk of loss of profit associated with fluctuations in sales volume. The greater the effect of operating leverage, i.e. The greater the share of fixed costs, the greater the business risk.

Financial leverage – this is an indicator of the potential for changes in profit due to changes in the ratio of borrowed and equity funds. The effect of financial leverage characterizes degree of financial risk, those. the likelihood of loss of profit and decreased profitability due to excessive amounts of borrowed capital.

The first method of calculating the effect of financial leverage (EF 1) connects the volume and cost of borrowed funds with the level of return on equity:

EGF1 = (1 − SNP) × (ER − SRSP) × (ZK / SK),

where SNP is the income tax rate; ER – economic profitability (return on assets);

SRSP – average calculated interest rate; ZK – borrowed capital; SK – equity capital.

This indicator reflects a possible change (increase or decrease) in the return on equity associated with the use of borrowed funds, taking into account the payment of the latter:

if SRSP< ЭР, то у предприятия, использующего заемные средства, рентабельность собственных средств возрастает на величину ЭФР1 ;

if SRSP > ER, then the return on equity of an enterprise that takes out a loan at a given rate will be lower than that of an enterprise that does not do so by the amount of EFR1.

With the second calculation method, the effect of financial leverage (EFF 2) shows by how many percent the net profit per share will change if the profit (before interest and taxes) changes by 1%, i.e. it shows the possibility of increasing return on equity and net earnings per share through the use of credit:

The more expensive borrowed funds are for an enterprise, the greater the EFR and, consequently, the financial risk. This is especially dangerous when profits decrease.

Conjugate lever characterizes the combined impact of business and financial risks and shows by what percentage net profit will change when sales volume changes by 1%:

Conjugate leverage = Strength of operational leverage × Effect of financial leverage For the financial stability of an enterprise, it is important:

find the optimal ratio between fixed and variable costs in the structure of product costs;

choose a rational capital structure in terms of the ratio of equity and borrowed funds.

Introduction 3
1. Theoretical aspects of break-even for tourism industry enterprises 4
1.1. The concept and essence of enterprise break-even 4
1.2. Methodology for determining the break-even point in the tourism industry 7
2. Break-even analysis of a tourism industry enterprise using the example of Galant Tour LLC 11
2.1. General characteristics of the activities of the travel agency 11
2.2. Determining the break-even point for sales at Galant Tour LLC 14
Conclusion 19
List of used literature 21

The relevance of the topic of the course work is determined by the fact that in order to successfully conduct commercial activities, a tourism industry enterprise needs to know exactly in what volume it will be necessary to sell a tourism product or service to cover all costs. At the same time, the sale of a product or service in a volume less than the break-even point leads the travel company to losses, and in a larger volume - to profit.

1. Federal Law of November 24, 1996 No. 132-FZ “On the Fundamentals of Tourism Activities in the Russian Federation” (with the latest amendments and additions) // Inform.-legal. "Garant" system. – Date of access: 05/16/2015
2. Balabanov I.T., Balabanov A.I. Economics of tourism: Textbook. allowance. - M.: Finance and Statistics, 2011. – 290 p.
3. Bogdanov E.I., Bogomolova E.S., Orlovskaya V.P. Economics of the tourism industry. Textbook. – M.: Bustard, 2014. – 320 p.
4. Borodin V.V. Economics of tourism. – M.: Forum, 2011. – 240 p.
5. Braicheva T.V. Enterprise economy. - St. Petersburg. Peter, 2013. – 462 p.
6. Butko I.I. Tourism business: basics of organization - Rostov n/D: Phoenix, 2013. - 384 p.
7. Gulyaev V.G. Organization of tourist activities. - M.: Pravo, 2011. – 315 p.
8. Dmitrieva M.N. Zabaeva M.N., Malygina E.N. Economics of the tourist market: textbook. – M.: Unity-Dana, 2012. – 294 p.
9. Dracheva E., Zabaev Y., Ismaev D. Economics and organization of tourism. Textbook allowance. – M.: KnoRus, 2015. – 566 p.
10. Ovcharov A.O. Economics of tourism. Textbook allowance. – M.: Infra-M, 2014. – 256 p.
11. Raitsky K.A. Enterprise economics: Textbook for universities. - M.: Dashkov and K, 2014. - 1012 p.
12. Temny Yu.V., Temnaya L.R. Economics of tourism. – M.: Infra-M, 2010. – 448 p.
13. Trukhachev V.I., Lyakisheva I.N. Economics of international tourism. Textbook allowance. – M.: Yurayt, 2015. – 418 p.
14. Ushakov D.S. Economics of the tourism industry. – Rostov n/d.: Phoenix, 2010. – 448 p.
15. Khitskova I.F. Economics of Tourism - M.: Finance and Statistics, 2011. - 243 p.
16. Cherevichko T.V. Economics of tourism. Textbook allowance. – M.: Dashkov and Co., 2012. – 264 p.
17. Shmalen G. Fundamentals and problems of enterprise economics. - M.: Finance and Statistics, 2014 – 406 p.
18. Economics of tourism: textbook / M.A. Morozov, N.S. Morozova, G.A. Karpova, L.V. Khorev. – M.: Federal Agency for Tourism, 2014. – 320 p.

Subject:	Economic foundations of the theory of break-even for tourism industry enterprises using the example of Galant-Tour
Vendor code:	1505216
Date of writing:	18.05.2015
Kind of work:	Course work
Item:	Economics of the tourism industry
University:	Russian New Open University (RosNOU)
Scientific:	-
Originality:	Anti-plagiarism.University - 64%
Number of pages:	23

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Break-even point: concept, calculation methodology, application

Break-even operation of a hotel enterprise depends on many factors, including the choice of the optimal volume of production and provision of services and the appropriate pace of development. The amount of revenue must cover all costs incurred and ensure a profit. To solve this problem, there is an appropriate analytical tool.

Coverage amount- the difference between revenue and total variable costs, i.e. the sum of fixed costs and profits. To calculate the coverage amount, all variable costs (sometimes called direct costs), as well as part of the overhead costs, which depend on the volume of production and services provided and are therefore classified as variable costs, are subtracted from revenue.

Under average coverage understand the difference between unit price of a service and average variable cost. The average coverage reflects the contribution of a service unit to covering fixed costs and generating profit.

Coverage factor is called the share of the coverage amount in sales revenue. For an individual service unit, the coverage ratio is the share of average coverage in the price for that service unit.

Break even(critical volume of service provision (sales)) is the volume of sales at which the income received provides reimbursement of all costs and expenses, but does not provide the opportunity to make a profit, in other words, this is the lower limit volume of service provision at which profit is zero.

Hotel break-even points, for example, are characterized by the following indicators:

threshold (critical) sales volume- revenue that corresponds to the break-even point.

profitability threshold- such revenue from sales at which the enterprise no longer has losses, but does not yet receive a profit.

financial safety margin- the amount by which a hotel company can afford to reduce revenue without leaving the profit zone, or the deviation of actual revenue from the threshold.

The margin of financial strength can also be calculated as a percentage if a percentage deviation is established;

margin of safety- the difference between income from break-even sales and income from sales at a certain level of their volume. A high level of margin of safety indicates a relatively safe business position.

Let us give the calculation of the break-even point using the data in table as an example. 7.2 and depict it in Fig. 7.1.

Rice. 7.1.

• 1. Threshold (critical) sales volume = 100,000 rubles:: (386 - 251) rubles/number. = 740 numbers;
• 2. Profitability threshold = 740 rooms x 386 rubles/room. =

RUB 285,700

• 3. Margin of financial strength = 386,000 rubles. - 285,700 rub. = = 100,300 rub.
• 4. Margin of safety = 1000 numbers - 740 numbers = = 260 numbers.

Table 7.2. Initial data for calculation

Thus, with a sales volume of 740 rooms and sales revenue of 285,700 rubles. the hotel reimburses all costs and expenses with the income received, while the enterprise's profit is zero. This state is called the “break-even point” or “dead point.” The margin of financial strength is 100,300 rubles.

The greater the difference between the actual volume of service provision and the critical one, the higher the “financial strength” of the hotel enterprise, and therefore its financial stability.

The value of the critical sales volume and the profitability threshold is influenced by changes in the amount of fixed costs, the value of average variable costs and the price level. Thus, a hotel enterprise with a small share of fixed costs can produce relatively fewer services than an enterprise with a larger share of fixed costs in order to ensure break-even and safety of its production. The margin of financial strength of such a hotel enterprise is higher than that of an enterprise with a larger share of fixed costs.

The financial results of an enterprise with a low level of fixed costs are less dependent on changes in the physical volume of services provided. A hotel company with a high share of fixed costs should be much more concerned about a decrease in room occupancy.

Break-even is a state where a business makes neither profit nor loss; the income received from the activity exceeds or is equal to the expenses associated with it.

The difference between the actual number of sold tourism products and the break-even sales volume is a safety zone, and the larger it is, the stronger the financial condition of the enterprise. Break-even sales volume and safety zone are fundamental indicators when developing a business plan, justifying management decisions, and assessing the company’s activities.

Ansiiz break-even production is carried out in order to study the relationship between changes in production volume, costs and profits. This analysis is a fairly simple in form and deep in content tool for planning and making management decisions at a commercial enterprise.

The purpose of the analysis is to determine break-even points. The break-even point, or profitability threshold, is the point of sales volume at which the enterprise has costs equal to the revenue from the sale of all products, i.e. there is no profit or loss. It is a criterion for the effectiveness of an enterprise. If a company does not reach the break-even point, then it is operating ineffectively.

To determine the break-even point, the marginal income method, mathematical (equation method) and graphical methods can be used. Let's take a closer look at them.

1. Marginal income method for determining the break-even point. There are two ways to determine the amount of marginal income. First way:

Second way:

Accordingly, if we subtract fixed costs from marginal income, we obtain the amount of revenue:

The break-even point, or profitability threshold, can be determined using the following formula

where TB is the break-even point in sales units;

FZ - fixed costs;

MD - marginal income per unit of sales.

2. Mathematical method for determining the break-even point. He

is based on the fact that any income statement can be represented as an equation

The form of the equation emphasizes that all costs are divided into those that depend on the volume of sales and those that do not depend on it.

Example 1. Let's consider the procedure for calculating the break-even point for a travel agency. Initial data:

• the price of one tour is 12,000 rubles;
• variable costs for one tour - 4000 rubles;
• fixed costs - 8,000 rubles.

Solution. Since at the break-even point profit is zero, it can be found provided that revenue and the sum of variable and fixed costs are equal.

Using the equation method, we introduce the following components: X- break even;

• 12 000x - revenue;
• 5000x - total variable costs.

Let's solve the equation:

• 12 OOOx - 5000x - 4000 = 0,
• 7000x = 40,000,

X= 40 (units).

Conclusion: break-even operation of the enterprise will be achieved with a sales volume of 40 tours.

3. Graphical method for determining the break-even point. This method of determining the break-even point involves building

break-even chart in which the volume of sales of a tourism product is shown horizontally, and the cost of production and profit, which together make up sales revenue, are shown vertically.

With the graphical method, finding the break-even point comes down to constructing a complex graph of “costs - volume - profit”. The sequence of plotting is as follows:

• 1) a coordinate system is determined for constructing a complex graph “costs - volume - profit”. The abscissa axis reflects the production volume or sales volume in physical terms, and the ordinate axis represents the revenue indicator and the sum of fixed and variable costs;
• 2) first of all, the line of fixed costs is plotted on the graph in the form of a straight line parallel to the x-axis;
• 3) from the line of fixed costs, a line of total costs is constructed;
• 4) a straight line is drawn (coming from the point with coordinates zero, zero) corresponding to the revenue value;
• 5) break-even point - the intersection of the line of revenue and total costs; the zone below is the zone of losses, and the zone above is profit.

The break-even point on the graph is the point of intersection of straight lines built according to the value of costs and revenue (Fig. 5.1).

Rice. 5.1.

The break-even point (profitability threshold) shown in the figure is the point of intersection of the gross revenue and total costs graphs. The amount of profit or loss is shaded. At the break-even point, the revenue received by the enterprise is equal to its total costs, while the profit is zero. Revenue corresponding to the break-even point is called threshold revenue.

The sales volume at the break-even point is called the threshold production (sales) volume. If an enterprise sells a tourism product less than the threshold sales volume, then it suffers losses; if it sells more, it makes a profit.