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Arsha posted an Question

September 21, 2020 • 17:35 pm

30 points

UGC NET
Commerce

What is indifference point in business finance

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Priya gulani

This can also help you..https://www.slideshare.net/mobile/SimranKaur116/operating-financial-and-combined-leverage
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Rucha rajesh shingvekar

see this
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thankyou
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Priya gulani

This one is in context with finance. The EPS, earnings per share, ‘equivalency point’ or ‘point of indifference’ refers to that EBIT, earnings before interest and tax, level at which EPS remains the same irrespective of different alternatives of debt-equity mix At this level of EBIT, the rate of return on capital employed is equal to the cost of debt and this is also known as break-even level of EBIT for alternative financial plans
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thankyou
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Rucha rajesh shingvekar

Another important tool that managers use to help them choose between alternative cost structures is the indifference point. The indifference point is the level of volume at which total costs, and hence profits, are the same under both cost structures.
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Priya gulani

The indifference point is the level of volume at which total costs, and hence profits, are the same under both cost structures. If the company operated at that level of volume, the alternative used would not matter because income would be the same either way. At the cost indifference point, total costs (fixed cost and variable cost) associated with the two alternatives are equal.
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Last sentence please explain
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The point of cost where both variable and fixed costs are equal for the two alternatives
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