A Break-Even Analysis is an analytical tool that allows an entity to determine at what point its business may reimburse all of the investments made in this project, and the subsequent income that can be called profit. This point is called the break-even point, break-even threshold, or profitability threshold. When this point is reached, the enterprise or investment project has no profit and no losses. Even before the start of investment activity, it is necessary to determine the volume of products to sell or the volume of services to provide to compensate for current costs.
A comprehensive break-even analysis entails getting a dynamic view of the correlation between its sales, costs, and profits. This analysis also helps to understand the feasibility of increasing production volumes, calculate and schedule a sales plan, determine the number of product units that must be sold to work without losses, and evaluate how changes in prices, costs, and sales volumes affect the company's revenue. A Break-Even Analysis template available in Excel can be downloaded through the link below.
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