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Free Sample of Break-Even Analysis

Break Even Point

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Aslam Khan
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36 views5 pages

Free Sample of Break-Even Analysis

Break Even Point

Uploaded by

Aslam Khan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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BREAK-EVEN ANALYSIS

Based On Accounting Profit

Inputs
Fixed Costs

Break-Even Point Based On Acct. Profit = 0

$150,000
$30,000

30

$120,000
$90,000

Sales Revenue / Unit

$6.00

Variable Costs / Unit

$4.00

Total
Costs
Sales
Revenue
Accountin
g Profit

$60,000
$30,000
$0
($30,000)
($60,000)
0

5,000

10,000
Unit Sales

Calculate the Break-even Point using the Formula


Break-even Point (Unit Sales)

Back solve for the Break-even Point using the Income Statement
Unit Sales
Sales Revenue
Variable Costs
Gross Margin
Fixed Costs
Accounting Profit

15,000

20,000

Data Table: Sensitivity of Costs, Revenues, and Acct. Profit to Unit Sales
Input Values for Unit Sales
Output Formulas:
Total Costs
Sales Revenue
Accounting Profit

BREAK-EVEN ANALYSIS

Based On NPV

(in thousands of $)
Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Key Assumptions
Sales Growth Rate
Change in Sales Growth Rate
Inflation Rate
Real Cost of Capital
Tax Rate

55.0%
2.0%
11.0%
35.0%

2.5%
11.2%
35.0%

-15.0%
3.0%
11.4%
35.0%

-15.0%
3.5%
11.6%
35.0%

-20.0%
4.0%
11.8%
35.0%

-25.0%
4.0%
12.0%
35.0%

-30.0%
4.0%
12.2%
35.0%

13.2%
13.2%

14.0%
29.0%

14.7%
48.1%

15.5%
71.0%

16.3%
98.9%

16.5%
131.6%

16.7%
170.3%

2,100
$9.70
$7.40
$5,280

$9.94
$7.59
$5,412

$10.24
$7.81
$5,574

$10.60
$8.09
$5,769

$11.02
$8.41
$6,000

$11.46
$8.75
$6,240

$11.92
$9.10
$6,490

$20,370
$15,540
$4,830

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$0
$0
$0

$5,280
$1,421
$6,701

$5,412
$1,421
$6,833

$5,574
$1,421
$6,996

$5,769
$1,421
$7,191

$6,000
$1,421
$7,422

$6,240
$1,421
$7,662

$6,490
$1,421
$7,911

($1,871)
($655)
($1,216)

($6,833)
($2,392)
($4,442)

($6,996)
($2,449)
($4,547)

($7,191)
($2,517)
($4,674)

($7,422)
($2,598)
($4,824)

($7,662)
($2,682)
($4,980)

($7,911)
($2,769)
($5,142)

$1,421
$205

$1,421
($3,020)

$1,421
($3,126)

$1,421
($3,253)

$1,421
($3,403)

$1,421
($3,559)

$1,421
($3,721)

Discounting
Discount Rate = Cost of Capital
Cumulative Discount Factor

0.0%

Price or Cost / Unit


Unit Sales
Sales Revenue / Unit
Variable Cost / Unit
Cash Fixed Costs

Cash Flow Forecasts


Sales Revenue
Variable Costs
Gross Margin
Cash Fixed Costs
Depreciation
Total Fixed Costs
Operating Profit
Taxes
Net Profit
Add Back Depreciation
Operating Cash Flow
Investment in Plant & Equip

($11,350)

$1,400

Cash Flows
Present Value of Each Cash Flow
Net Present Value

($11,350)
($11,350)
($21,628)

$205
$181

($3,020)
($2,340)

($3,126)
($2,111)

Data Table: Sensitivity of Net Present Value to Year 1 Unit Sales

($3,253)
($1,902)

($3,403)
($1,711)

($3,559)
($1,536)

($2,321)
($859)

and Year 2 Sales Growth Rate


Output Formula:
Net Present Value

Input Values for Year 1 Unit Sales

Input Values for Year 2


Sales Growth Rate

NPV Break-Even Contour (Based On NPV = 0) Across


Year 1 Unit Sales And Year 2 Sales Growth Rate
$10
$9
$8

NPV Break-Even
Contour

$7
Net Present
Value
$6
$5
$4
$3
$2
$1
$0
Column F
Column E
Column D
Column C
Year 1 Unit Sales

Year 2 Sales Growth Rate

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