Once the company has exceeded breakeven (UR), each increase in sales generates more profit increased until it reaches a point where the increase is similar to beneficial sales. This is because non-current costs, or charges of structure, they lose weight in the income statement. Keep in mind that we are assuming that sales can increase indefinitely with the same costs currents.
This situation is called operating leverage and can be synthesized in the AO ratio = (% increase in profits) / (% sales increase). The AO, taking values greater than one, immediately after passing the UR and approaches one for a high level of sales, so discussed above.
The Excel application calculates the UR from a certain amount of non-current costs and current cost%, and simulates the percentage of increase of benefits from a continuous percentage increase in sales. With these percentages obtained AO ratio (operating leverage), which is also plotted.
see the Excel spreadsheet:
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