Break Even Analysis

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The big picture:

The break-even analysis is a practical tool that directs one’s attention to important business issues such as selling prices, costs and sales volumes. The break-even point is the point at which revenue is exactly equal to costs. Meaning at this point, no profit is made and no losses are incurred. The break-even point can be expressed in terms of unit sales or currency (CHF) Sales. That is, the break-even units indicate…

When to use it:

Breakeven analysis seeks to identify the levels of sales volumes, selling prices and production costs at which a business can become profitable. The knowledge and information obtained from the break-even analysis facilitates the drawing up and the determination of complicated budgeting and profit-planning issues. Thus, the break-even analysis is a vital tool of financial planning and control. The model can be applied within…

How to Use the Tool:

When companies want to determine the ideal quantity that must be sold to cover expenditures, they perform a break-even analysis, often with the help of an Excel template. A break-even analysis is a simple approach that uses a company’s fixed and variable costs, as well as its product’s or service’s price, in order to determine the quantity that must be sold to cover these aforementioned costs..

Break Even Analysis Contribution Margin

Break Even Dynamic Chart

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