This lesson will provide the tools necessary to determine the break-even point for a borrower activity, for an income-generating project or for a micro-finance organization branch. Profitability can be forecast and managed when one knows: i) at what level of production a business will be able to cover all of its expenses; ii) what minimum product price is needed for the product to be viable at different levels of production; and iii) what happens if the financial estimate of costs and prices are changed.
You will learn how to calculate a break-even point for an income-generating activity and for a branch. Topics covered include:
- Fixed costs
- Variable costs
- Contribution margin
- Required break-even volume / revenue
- Break-even portfolio size