Break-Even Analysis Template

Here is a good quality Break-Even Analysis Template that can help to keep an eye on business profits and track as when and how it moves to Break-Even. A Break-Even is refer to a situation when income meets the total expenses for a specified period of time. This is an Excel Template that can easily be used by Accounts Manager or The CEO to have a very good eye on total incomes and expenses.  Using this excel template, you can forecast a potential point when expected sales is going to be at break-even with the fixed and variable cost. Break-even analysis is an important tool to prepare a business plan to figure out the volume of sales. It will help you to evaluate and cover both variable and fixed costs involved in the manufacturing of goods. Break-even point is the level at which your business made or loss no money. Break-even analysis is important for all business owners because with the help of this analysis they can settle price for their products and services by considering their own profit and purchasing power of their customers. Usually all businesses have definite level of permanent cost that is incurred irrespective of the amount of business being done. Fixed expenses cover different costs such as rent, advertising, bank charges administration wages, computer system charges, training accounting fees, electricity rates, company vehicles, building and other repairs as well as maintenance.

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Break-Even Analysis Template

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Why Break-Even Analysis is Important?

Break-even analysis is really important to control the fixed expenses of your business. Fixed costs are eventually variable but these lean to be variable in lumps because these are directly connected to the volume of activity. It is a big point of your business because without calculating and considering it you cannot make profit. It will help you to cover all variable and fixed costs incurred. The point at which you reached is usually known as “break-even point” and the more you get after this point is known as profit.

Calculation of Break-Even Point

You can easily calculate break even point by dividing your overheads by Gross Profit margin. For instance:

Gross Profit Margin: 45%

Overheads: $300,000

Break-Even: $300,000/.45 = $666,666

Now $666,666 is your break-even cost and in order to cover all fixed and variable costs you have to sales at least to this point. All sales after break-even point will collect almost 45% of the value of sale to your profits.

Carefully determine your gross profit margin because lower gross profit margin can flatter your sales line on the sales graph and in this way you can sale more products till reach to your break -even. Gross profit is very important as it is a key to determine your profit and you have to select a perfect approach to determine your gross profit considering your market. If you are operating in price sensitive market then you have to keep low margins in order to increase your sales volumes.

Break-even analysis is a best weapon and marketing tool to control your business in target market. It helps you to take important business decisions such as new recruitment, investments, pricing policies etc. for the betterment of your business.

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