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In this video, I'm going to share with you how to calculate the break-even point using sensitivity analysis with excel data tables, Hopefully, you'll enjoy the excel data table tutorial so let's see the entire video.
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Use sensitivity analysis to find how long before you before profitable on investment. Also, if you analyze to construct multiple scenarios with different variables and visualize it all in a conditional table.
A break-even analysis is a useful tool for determining at what point your company, or a new product or service, will be profitable. Put another way, it's a financial calculation used to determine the number of products or services you need to sell to at least cover your costs.
The break-even point formula is determined by dividing the total fixed costs associated with production by the revenue per individual unit minus the variable costs per unit. In this case, fixed costs refer to those which do not change depending upon the number of units sold.
Break-even analysis is an important aspect of a good business plan since it helps the business determine the cost structures and the number of units that need to be sold in order to cover the cost or make a profit.
The basic idea behind doing a break-even analysis is to calculate the point at which revenues begin to exceed costs. Examples of fixed costs include rent, insurance premiums, or loan payments. Variable costs are costs that change with the quantity of output. They are zero when production is zero.
If you have a put option, which allows you to sell your stock at a certain price, you calculate your breakeven point by subtracting your cost per share to the strike price of the option. The strike price on a put option represents the price at which you can sell the stock.
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