Microsoft Office Tutorials and References

In Depth Information

**Calculate the Break-Even Point**

Calculate the

Break-Even Point

You can use the powerful Goal Seek tool to

calculate the break-even point for a worksheet

financial model.

In a
break-even analysis,
you determine the

number of units you have to sell of a product

so that your total profits are zero — that is, the

product revenue is equal to the product costs.

You might think this would be trivial: create a

profit formula that subtracts expenses from

revenue, and adjust the units sold until the

formula returns zero.

However, in the real world the calculation is

usually a bit more complex than that. In

particular, there are costs associated with each

unit sold, so your model must take those costs

into account. This means that the total

expenses are to a certain extent dependent on

total sales, which makes the break-even analysis

more complicated.

Rather than trying to find the break-even point

manually, the Goal Seek tool can run the

calculation for you in a fraction of the time.

1
Set up your worksheet

model.

●
For the number of units,

enter any value you like,

such as 1.

1

2
Click the Data tab.

3
Click What-If Analysis.

4
Click Goal Seek.

2

3

4