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Budgeting & Breakeven Analysis |
Budgeting
This essential function to predict the company cost structure
is usually focused on the following cost areas :
- HR costs (fix & variable salaries, benefits, training,
time management, contributions)
- Corporation/Vat tax costs
- Intercompany billing & transfer pricing
- Commercial & marketing costs
- Industrial costs
For the first 3 of these 5 points, HTLC can supply a consistent
lot of organized information which are allowing any small
and medium sized multinational company to keep control of
its cost structure, also without global expensive software
platforms, which might be convenient only for medium/ big
company sizes.
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Break-even analysis
Purpose: The purpose of a break-even analysis is to determine
the business revenue necessary to pay all your expenses and
is a simple and powerful financial-management technique related
to business profits.
and function: At the break-even point, a business does
not make any money, but it also does not lose any.
In other words, a break-even model can help determine the
minimum output necessary to cover all operating costs as
well as predict the earnings before interests and taxes
that will be achieved at various level.
Benefits:
The benefits arising from a breakeven analysis
are:
Capital expenditure analysis;
Pricing policy;
Labor cost;
Firm’s cost structure; and
Financing decisions.
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Elements of a breakeven analysis
The process requires the study of the firm’s cost
structure, volume of output and profits.
To calculate the break-even point, you need to determine the
total fixed costs of a business and its gross profit margin
as a percentage.
Fixed costs: Fixed costs are to be intended as those expenses
a business must pay regardless of the sales volume, such
as:
Administrative salaries;
Depreciation;
Insurance;
Property;
Rent;
Interest charges from debt financing.
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HTLC Network support:
Budgeting for a complex lot of information like HR cost,
means to prevent and keep under control fix and variable costs
which do make a real difference in most of organizations,
together with corporate taxation and trade/ industrial costs.
Forecasting next year/s cost, checking the on-going evolution
of the same, auditing and reallocating the differences, grants
a full control on the cost system, which might be customized
depending on the level f detail the company is considering
sufficient to obtain the desired results. HTLC has the availability
of flexible software tools and skilled operators which are
allowing any kind of customization of this service.
When opening an economic or representative entity in a new
market for business or corporate image aims, HTLC can support
the client to collect, organize, process and manage the content
and graphic layout of the results of a break even analysis,
which is usually one of the precious instruments to predict
the possibility of a profitable business and essential part
of the business plan.
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