Fixed cost multiplier and new "WEAK SIGNALS"
How much does a company have to grow to be able to sustain € 1.000 in Additional Costs? The answer to the question is provided by the Fixed Cost Multiplier, or the ratio between 1 and the Contribution Margin.
Let's take an example.
Bank XYZ evaluates the disbursement of a loan which provides for additional financial charges of € 1.000.000 for 5 years. Assuming that the Contribution Margin of the SPA company (100.000.000 of Revenues) is equal to 5%, it follows that the Fixed cost multiplier is 20.
By how much does a company have to grow, therefore, the SPA in order to cover 1.000.000 additional financial charges? The answer is provided by the new indicator: exactly 20.000.000 (+ 20% of Revenues). It is up to the analyst to assess whether the XYZ firm will be able to increase revenues by 20%.
The Fixed Cost Multiplier is now available, both for historical data and for the Business Plan, among the Leanus indices. It is also visible in the Home in the "Last Period Evaluation" box. Also on Home, in the Eco / Fin Summary box, the anomalous contractions of Revenues, Liquidity and Shareholders' Equity and the increase in Financial Debts are now highlighted.
Watch this video and find out more!
NOTE: The Leanus platform is constantly renewed and the individual functions are constantly updated. Some features shown in webinars may have consequences that were not yet available at the time of registration.