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Break-Even Analysis Puts Owners on the Pathways to Profits

By Eugene Peterson

You are in business to make a profit. Understanding and using the principles of break-even and also by knowing what that number is, can help you manage profitability.  The break-even point is the point at which costs and expenses and income are equal – there is no net loss or gain, one has “broken even”.
Benefits:
• Predict and measure gross sales volume to achieve and reach break-even, then builds to make a profit.
• Assess early prediction and manage to get back on track to make the profits you need.
• Check current break-even and find ways to lower that benchmark to increase profits.  When used as a tool, you can use it to:
• Set price levels
• Target optimal variable/fixed cost combinations
• Determine the financial attractiveness of different strategic options for your company Break-even analysis is a tool to calculate at which sales volume the cost of goods and overhead costs of producing your product will be recovered.  It specifically shows business smart managers the point at which your product stops costing you money to produce and sell, and starts to generate a profit for your company.  My gift to you is a simple excel spread sheet that will help you make this straightforward calculation.

 

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ADVISE & CONSULT, INC. is a nationwide construction expert witness firm. We provide a full range of construction expert witness services to law firms, insurance carriers, property owners, home owner associations, contractors, sub-contractors, architects, engineers and most other related fields. Our services include, but not limited to, expert witness testimony, mediation, arbitration, deposition, appraisal, umpire services, estimates, consulting, fact finding, site investigation, site inspection, building codes, OSHA, and many other related services to meet your needs in construction defect resolution, insurance claim disputes, estimate disputes, and construction consulting. We provide services in all 50 states with offices in ARIZONA, CALIFORNIA, COLORADO, CONNECTICUT, FLORIDA, GEORGIA, IDAHO, LOUISIANA, MICHIGAN, MINNESOTA, MONTANA, NEVADA, NEW JERSEY, TENNESSEE, UTAH, VIRGINIA, AND WASHINGTON.