Microsoft Office Tutorials and References
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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
For the number of units,
enter any value you like,
such as 1.
2 Click the Data tab.
3 Click What-If Analysis.
4 Click Goal Seek.
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