Total Production Costs

Total production costs.

Break even analysis helps the firm to analyze the level of sells at which total revenue equals the total costs.

Price * Quantity = Total Fixed costs + Total Variable costs

Current investors use it to review the last performance of the company which they have invested in, and to determine if to maintain increase or liquidate their investments.

During the founding of a company, each of the founders must present part of the basic capital. The contract describes dividing of shares by the amount of a resources invested to the basic capital. Value of a basic capital is different for every kind of a company and every country.

Revenue represents income of a company from its economic activities. This income can be used for financing future activities, expanding of capital and divining the shares. The amount of income determines an economical success of a company and possibilities for the future growth.

The main features of revenue can be described as follows:

The reserves contain a part of basic capital of a company and must be increased proportionally to increase of a basic capital. Reserves are used in emergency situation, when company is not able to fulfill it’s commitments with main sources of capital.

Use only of internal resources is not enough for sustainable grown. In these cases internal sources are supplemented by external sources of capital. External sources are mainly used for funding the company’s growth and one time payments such as expanding of business, acquiring new equipment, etc.

There is many types of external financial resources, every with its own advantages and disadvantages. Every company must seek the optimal structure of the finances to maintain the maximum stock value. Wrong structure of external capital sources leads to slow economy growth, instability and increase of time for returning the investments.