Break-Even Analysis | How to Calculate the Break-Even Point Explained.
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- čas přidán 6. 08. 2024
- Watch this video if you want to understand how to calculate the break-even point and conduct break-even analysis.
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The video also explains and shows you how to calculate key concepts such as contribution and the margin of safety.
Break-even analysis is an essential financial decision making tool, helping business owners and future entrepreneurs to predict how quickly, if at all, their potential business venture or product launch will be.
We have created a free supporting resource which will allow you to test your knowledge and understanding of break-even analysis after watching this video. Here is the download link: www.twoteachers.co.uk/break-e...
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Thoughts below... how quickly would you want to break-even if you were to start a business today, what would be your aim?
Explained and illustrated really well. Many thanks
This is an excellent video. I teach this process in my IB Business Management class and it will greatly help my students.
Glad it was helpful! We also have a free supporting activity worksheet available on the following link for students to apply their knowledge following the video: www.twoteachers.co.uk/free-resources-1
So so clear! I'm preparing for a consulting case interview nd this is so easy to understand and the example is great as great. HIghly recommend!
Thank you, really appreciate that. Hope the interview goes well! 👍
same here, wonder how did it go
Great video. Nice and easy explanation. Thanks 😁
Thankyou Miss Rowe, appreciate it, hope it helps students to master break-even 👍 Supporting activity worksheet will be upload Tuesday 😃
It is really helpful, thank you
Great to hear!
Thank you sir!!
No, thankyou for watching, hope it helped.
love it
That's great to hear.
well done. Very nicely explained. You sound Yorkshire :)
Thankyou very much for the feedback, much appreciated & yes you got it in one, Yorkshire is correct 😀
Two Teachers No problem - continue doing more of these videos because they’re class.
Guessing you’re interested into football too?😉
@@chelseaking1735 😂 yes, season ticket holder at Break-Even FC. They would beat Chelsea anyday! Thankyou aswell, planning weekly videos, uploaded on a Sunday usually 👍
Hello two teachers , can u explain ways to evaluate business's worth in your next video
Hello Ekta, we currently have a list of requests and a schedule, so it won't be the next video but we will certainly add it to the list for you 😀
Great video but what happens if I am selling multiple products. e.g. a Tshirt with different values, a mug and a printed canvas. All with different values, costs and sales prices.
Im scratching my head.... Thanks
There is such thing as a 'multiple product break even point' where you work out averages. However what you have described is is criticism of the break even formula as it is hard to do for more than one product. Thank you for the positive feedback 😁
You would need to find the BEP for all products.
Do u have the awnser sheet
Hi Diego, yes it's available to download with the worksheet, I imagine that's what you are referring to?
To the questions you have just asked me in the comments sections
How quickly would you want to break even if you were to start a business today, what would be your aim
Most businesses don't make any profit in their first year of businesses, accounting to Forbes. In fact most of the new businesses need 18 to 24 months to reach it's profitability. And then there's the reality that 25 percentage of new businesses in their first year, accounting to small business adminstrations. Three to four years Which is the standard estimation for how long it takes a business to be profitable. Most of yours earnings in the first year of the business will be used for paying expenses and reinvements. The break even point is the point at which total costs and total revenue are equal meaning there is no loss or gain for your small business. In other words you have reached the levels of productions at which the costs of the production equals the revenues for the products. It will be helping you to entrepreneur come up with a pricing strategy that will not costs but it will generate a profit and a good profit margins in your business
Thanks for your input, you have made some great points 👍
Dear Friends,
I want to confirm:
If a company has passed the break-even point, why should we do variable costs minimums and maximum fixed costs then the profits will increase more?. Thank you.
Hi Ytuong, that's the formula and these are still costs to the business even once it has passed the break-even point so it allows us to calculate and forecast the profit.
@@TwoTeachers , how do we forecast the revenue and cost?
So essentially, the margin of safety can be calculated by the difference between a business’s actual output and their break even in units?
You've got it, you get the actual output/ forecast output and take away the number of units it takes to break even. Hope the videos helped you.
Two Teachers it really has, thanks👍🏼
@@mistapoppadom4037 that's great, really happy to hear that 😀 hopefully, you find the rest of our videos just as useful.
Why is break even point called as even?🤔 I know it is such a nonsensee question but if you know then you can answer me.
Yes, of course, it's because it is the point at which the business is neither making a profit or a loss. Therefore, costs are equal or EVEN to their income. So the business have broke even.
@@TwoTeachers Thanks sir
@@antonypatel6394 you're welcome Antony.