breakeven analysis


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Breakeven Analysis

An analysis of a product or company's sales required to neither lose money nor make a profit, but simply to cover costs. A company needs to at least break even in order to make the expense of producing a product worth the effort. As a result, breakeven analysis is an important feature in evaluating the risk of an activity. Breakeven analysis calculates the relationship between the fixed costs, variable costs, and profit of the product.

breakeven analysis

A mathematical method for analyzing the relationships among a firm's fixed costs, profits, and variable costs. Financial analysts are particularly interested in how changes in output and sales will translate into changes in earnings.
References in periodicals archive ?
With multiple product lines, the retailer can estimate a weighted average markup percentage that will improve the precision of the breakeven analysis.
This model includes breakeven analysis, going concern, feasibility study, and the business plan.
So are budgets and forecasts including variance analysis, breakeven analysis, and "pricing training courses.
Applied linear breakeven analysis can serve as a first approximation to real-life business settings.
As such, it is deducted from the sales figure for purposes of conducting a breakeven analysis, giving an adjusted total sales figure of $1,412,834.
Breakeven analysis can be used to determine how much loss in stock value a taxpayer can afford in chasing a lower tax rate.
This breakeven analysis illustrates that the cupola melt system will cross from a loss to a profit at an annual production level of 67,000 tons.
The recommendation includes the full rate and fees for the new loan and a breakeven analysis to let the customer know how long it would take to recoup the closing costs.
In the chapter on finance, several applications are addressed including Measures of Growth, Measures of Profitability, Measures of Liquidity, and Breakeven Analysis.
Describe, in a paragraph or two for each, the major conclusions of four financial statements: breakeven analysis, cash flow and income statements, and balance sheet.
Fitch runs cash flow breakeven analysis by applying stress scenarios to 3-, 6-, and 12-month average performance to test that under the stressed conditions, the transaction can withstand a level of losses commensurate with the risk associated to a rating level with the available credit enhancement.
They cover aspects like how to read a balance sheet and financial statements, master the accounting cycle, make long-term investment decisions, conduct breakeven analysis, calculate the cost of capital, and evaluate closely held companies.