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Breakeven

The document presents a break-even analysis based on accounting profit and net present value (NPV) for various scenarios, detailing fixed costs, variable costs, and sales revenue per unit. It calculates break-even points for different sets of inputs, showing the financial outcomes including gross margin, operating profit, and net profit over multiple years. Additionally, it includes cash flow forecasts and assumptions regarding sales growth, inflation, and tax rates.

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tdchoang1
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3 views6 pages

Breakeven

The document presents a break-even analysis based on accounting profit and net present value (NPV) for various scenarios, detailing fixed costs, variable costs, and sales revenue per unit. It calculates break-even points for different sets of inputs, showing the financial outcomes including gross margin, operating profit, and net profit over multiple years. Additionally, it includes cash flow forecasts and assumptions regarding sales growth, inflation, and tax rates.

Uploaded by

tdchoang1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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BREAK-EVEN ANALYSIS Based On Accounting Profit

Inputs
Fixed Costs $30,000
Sales Revenue / Unit $6.00
Variable Costs / Unit $4.00

Calculate the Break-even Point using the Formula


Break-even Point (Unit Sales) 15,000

Back solve for the Break-even Point using the Income Statement
Unit Sales 15,000
Sales Revenue $90,000
Variable Costs $60,000
Gross Margin $30,000
Fixed Costs $30,000
Accounting Profit $0
ing Profit
BREAK-EVEN ANALYSIS Based On NPV
(in thousands of $) 2001 2002 2003 2004 2005
Year 0 Year 1 Year 2 Year 3 Year 4
Key Assumptions
Sales Growth Rate 55.0% 40.0% 25.0%
Change in Sales Growth Rate -15.0% -15.0%
Inflation Rate 2.0% 2.5% 3.0% 3.5%
Real Cost of Capital 11.0% 11.2% 11.4% 11.6%
Tax Rate 35.0% 35.0% 35.0% 35.0%

Discounting
Discount Rate = Cost of Capital 13.2% 14.0% 14.7% 15.5%
Cumulative Discount Factor 0.0% 13.2% 29.0% 48.1% 71.0%

Price or Cost / Unit


Unit Sales 1,853 2872 4020 5026
Sales Revenue / Unit $9.70 $9.94 $10.24 $10.60
Variable Cost / Unit $7.40 $7.59 $7.81 $8.09
Cash Fixed Costs $5,280 $5,412 $5,574 $5,769

Cash Flow Forecasts


Sales Revenue $17,972 $28,553 $41,173 $53,268
Variable Costs $13,710 $21,782 $31,410 $40,637
Gross Margin $4,261 $6,770 $9,763 $12,630

Cash Fixed Costs $5,280 $5,412 $5,574 $5,769


Depreciation $1,621 $1,621 $1,621 $1,621
Total Fixed Costs $6,901 $7,033 $7,196 $7,391

Operating Profit ($2,640) ($263) $2,567 $5,240


Taxes ($924) ($92) $898 $1,834
Net Profit ($1,716) ($171) $1,668 $3,406

Add Back Depreciation $1,621 $1,621 $1,621 $1,621


Operating Cash Flow ($95) $1,450 $3,290 $5,027

Investment in Plant & Equip ($11,350)


Cash Flows ($11,350) ($95) $1,450 $3,290 $5,027
Present Value of Each Cash Flow ($11,350) ($84) $1,124 $2,222 $2,939
Net Present Value ($0)
2006 2007 2008
Year 5 Year 6 Year 7

5.0% -20.0% -50.0%


-20.0% -25.0% -30.0%
4.0% 4.0% 4.0%
11.8% 12.0% 12.2%
35.0% 35.0% 35.0%

16.3% 16.5% 16.7%


98.9% 131.6% 170.3%

5277 4222 2111


$11.02 $11.46 $11.92
$8.41 $8.75 $9.10
$6,000 $6,240 $6,490

$58,168 $48,396 $25,166


$44,376 $36,921 $19,199
$13,792 $11,475 $5,967

$6,000 $6,240 $6,490


$1,621 $1,621 $1,621
$7,622 $7,862 $8,111

$6,171 $3,614 ($2,144)


$2,160 $1,265 ($750)
$4,011 $2,349 ($1,394)

$1,621 $1,621 $1,621


$5,632 $3,970 $228

$1,400
$5,632 $3,970 $1,628
$2,832 $1,714 $602
BREAK-EVEN ANALYSIS Based On Accounting Profit

Inputs
Fixed Costs $225,000
Sales Revenue / Unit $45.00
Variable Costs / Unit $20.00

Calculate the Break-even Point using the Formula


Break-even Point (Unit Sales) 9,000

Back solve for the Break-even Point using the Income Statement
Unit Sales 9,000
Sales Revenue $405,000
Variable Costs $180,000
Gross Margin $225,000
Fixed Costs $225,000
Accounting Profit ($0)
BREAK-EVEN ANALYSIS Based On Accounting Profit

Inputs
Fixed Costs $35,000
Sales Revenue / Unit $3.00
Variable Costs / Unit $0.80

Back solve for the Break-even Point using the Income Statement
Unit Sales 36,364
Sales Revenue $109,091
Variable Costs $29,091
Gross Margin $80,000
Fixed Costs $35,000
Accounting Profit $45,000
Interest expenses 25000
EBT $20,000
Taxes 20000
Net profits ($0)

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