For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower than for a less capital intensive company with the same sales.

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A capital intensive, automated company will have higher fixed costs (due to the cost of the capital equipment) and lower variable costs, which leads to a higher break-even point (the point at which total revenue equals total costs). The margin of safety (the amount by which actual or projected sales exceed the break-even point) will also be lower because any decline in sales will have a greater impact on the company's ability to cover its fixed costs.

For a Capital Intensive, Automated Company the Break-Even Point Will