The IMPACT OF THE COVID-19 PANDEMIC ON BUSINESS EQUILIBRIUM

The Case of a Small Furniture Factory

Abstract

One of the main impacts of the recent COVID-19 pandemic was the disruption of cash flow for many companies, leading to the closure of those in more vulnerable sectors. Other organizations managed to adapt to the new context. Considering this situation, this descriptive research aimed to understand the impact of the pandemic on business equilibrium, analyzing the case of a small Brazilian furniture factory through the lens of cost-volume-profit analysis, from June 2019 to December 2022. The results found a generalized increase in input prices in a scenario with a sharp demand contraction. Using the variable costing method, it was found that the contribution margins of the company's products were flattened, unable to recover even three years after the start of the pandemic. Other metrics analyzed, such as net margin, break-even point for various products (mix), and operational safety margin, indicated that the negative economic and financial impacts were most severe in 2020, with gradual recovery. Besides documenting the historical phenomenon, the findings raise questions for future studies related to business survival strategies in scenarios of cost inflation and economic contraction.