|
|
| *Ostroff, Fair and Company>>>Financial Services |
How to compute breakeven point for financial institutions? |
How to compute breakeven point for financial institutions? "break-even rate鈥?is the interest rate that covers the credit cost ratio, the expense ratio, and the funding cost* of bank loans. * The credit cost ratio is the expected annual loan-loss ratio for each rating. It is calculated by multiplying the bankruptcy rate and the proportion of loans uncollected at time of bankruptcy. The expense ratio and funding cost are substituted by the short-term prime lending rate. Interest rate risk arising from mismatching between investment and funding related to deposits and loans is abstracted. Source(s): +Bank of Japan (Central Bank) http://www.boj.or.jp/en/type/ronbun/ron/... break-even means Total expenses (outflows) = Total revenues (inflows). Now their are many variations and forms at which you can calculate break even. In most costing systems you use this formula. BE(units) = [FC/CM] Where BE = break even in units FC = Fixed cost CM = Contribution margin which is SP - VC SP = Selling price VC = Variable cost all variables are per unit measured. If you want the break even in sales revenue then you simply mutlply the units figure by the selling price. Hope this is what you were after. If not simply use the Inflows=Outflows approach |
| Tags |
| Marketing & Sales Law & Legal Health Care Government & Non-Profit Food Service Financial Services Administrative and Office Support Other - Advertising & Marketing Search Engine Optimization |
Finance Categories--Copyright/IP Policy--Contact Webmaster |