As you already know, break even analysis is the task of determining the break even point or as others call it “reaching break even”. It is a point in time where the initial costs incurred are all paid back by the sales. Basically, a point in time where there is zero profit or loss. Determining the break even point is a very important factor when it comes to the profit planning process. As such, it is one of the financial metrics that investors look forward to when it comes to determining which investment venture is attractive.
As mentioned above, by simply building a break even analysis or looking at one if you’re an investor, you can use it as a tool to determine the economic feasibility of an investment proposal. Though there are also other financial metrics used to determine the financial feasibility and profitability of an investment proposal, break even point is one of the most commonly used due to its simplicity and how easy it is to understand.
Understanding a break even analysis report is one thing but building it is a different matter especially for different business cases. In other words, it’s not that easy to build a break even analysis report and a bit complex without the right know-how. Basically, when calculating the break even point, you will need to determine certain elements such as:
• Calculating the Break even point in Unit
• Calculating the Break even point in Dollars
Both calculates the break even point but uses different ways of calculation, as such, it can be complex at times. However, if you want to save yourself from building from scratch and using a lot of time building a break even analysis report, you can simply download a break even analysis Excel template which you can use as a base to start with or a reference when building your own break even analysis report. To learn how to calculate the break even point in Unit and in Dollars, you can also check this article out: What is Break-Even Analysis?
If you’re looking for break even analysis Excel templates or other financial model templates which are industry-specific for different use cases, simply visit eFinancialModels, a platform which offers financial modeling services as well as a wide variety of financial model templates ready-made by financial modeling experts.