【A.06.00】How many sales are affordable to drop before starting to make losses?

Briefing Note
Reading comprehension is a skill that empowers lifelong learning intelligence for a better self.
The number of sales that a business..

✅ ..can afford to drop before starting to make losses depends on various factors, such as the profit margin, fixed and variable costs, and the overall financial resilience of the business.


If a business has high fixed costs and low-profit margin..

✅ ..it may probably be unable to sustain a significant drop in sales before it starts losing money.


If a business has low fixed costs and a high-profit margin..

✅ ..it will be able to weather a significant drop in sales without incurring losses.


Each business will have..

✅ ..its unique break-even point, which is the point at which its revenue equals its total costs.


Once a business falls below its break-even point..

✅ ..it will start making losses.


It is crucial for businesses to..

✅ ..monitor their financial performance and regularly review their cost structure and revenue model to ensure that they remain profitable, if not at least sustainable.


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