Break Even Analysis Template is useful to describe whether your business revenue will cover all the expenses within a specific period of time. The period can be of one month or one year to measure it. If your business revenue is above break even point then your company is gaining profit. On the other hand, the company has to endure loss if your revenue is less than the break even point number.
Break Even Analysis Template Excel
The break-even analysis helps you define what you need to sell on monthly or annual basis to cover your expenses of doing business (break-even point). This break-even analysis excel template is effective to calculate it accurately. Companies should plan their sales and products precisely to shun that loss. You calculate the break even point number on the basis of fix costs or variable costs per unit of sales and revenue per unit of sales.
Why It Matters?
Break-even analysis is handy for business owners to determine when they will begin to turn a profit and guide them to price their products. It presents a productive analysis of the relation among expenses, costs, and profits. By doing this analysis you can get a concept of how your investment is going. It gives you a time estimation important for you to make profits so that you can properly plan for your business.
A break-even analysis can help you to determine under what scheme your company must work to be cost-effective. One of the best uses of this analysis is to perform with different scenarios. You get to know either you are going according to your initial planning or there is some alternation. This analysis also helps you to make important changes to ongoing course to break even as soon as possible.
Contents of Break Even Analysis Template
This Excel template consists of three major sections:
- Break-even point calculations
In this section, you just enter the duration and the selling price per unit.
- Fix costs
This section includes all the relevant (insurance, payroll, rent, advertising etc.) to the product.
- Variable costs
The variable cost part consists of all the variable costs (commissions and other expenses) related to the product.
Break Even Equation
TC = TR
TC= TFC + TVC
TR = P*X
TFC + TVC = P*X
- TC – Total Costs
- TR – Total Revenue
- TFC – Total Fixed Costs
- TVC – Total Variable Costs
- P – Sale Price per Unit
- X – Number of Unites Sold
Organizing a break-even analysis is vital to determine when your business will be able to earn profit and cover all the costs. This template is a well-known tool to help you understanding how to perform a break-even analysis.
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