Break-Even Analysis

A company can use this template spreadsheet to perform a break-even analysis. This basic spreadsheet calculates the break-even point as fixed costs divided by gross profit margin. A break-even analysis is one form of cost analysis; it is used to calculate the margin of revenues needed to exceed a company's break-even point - the point at which revenues equal the costs associated with producing that revenue. This supply side metric can be used by managers to help understand the relationships between sales, costs, and profits. A break-even analysis can be helpful to companies trying to analyze revenue margins for certain products or services, adjust pricing schemes, or set sales targets.