Breakeven Analysis » Scenario Analysis

The Purpose of Scenario Analysis

Once you have gathered and/or organized all the expenses into either the Fixed or Variable group, it will now be time to enter the appropriate data into the template.

Once you complete the initial breakeven analysis, you can also input alternative scenarios under the “$ Change” OR “% Change” columns. Do not input data into both columns as the program will sum up both together.

How To Do This

Once you have gathered and/or organized all the expenses into either the Fixed or Variable group, it will now be time to enter the appropriate data into the template.

Fixed Expenses

List each type of fixed expense under the “General and Admin/ Fixed Expenses” header. You can usually get this information off of the client’s income statement.

NOTE: Fixed expenses are expressed in dollars.

Then input the dollar value of each fixed expense item under the “Base” heading.

Variable Expenses

Enter the list each type of variable expenses under the “Variable Costs” header. You can usually get this information off of the client’s income statement.

NOTE: Variable expenses are expressed in terms of percentage of revenue.

Then, input each variable expense item as a percentage of total revenue under the “Base” heading.

Scenario Analysis

Once you have completed the initial breakeven analysis, you can also input alternative scenarios under the “$ Change” OR “% Change” columns. But do not input data into both columns as the program will sum up both together.

Fixed Expenses

DO NOT enter changes in both columns as the program will sum up both columns. Then, input your changes in the areas highlighted EITHER in yellow or aquamarine.

Variable Expenses

The program will calculate the contribution margin and the sales necessary to achieve breakeven status. Please note that this breakeven analysis assumes a single/composite product line. You may want to use a more sophisticated approach to ascertain the breakeven point for a mixed product group. Then, input your changes in the yellow highlighted area only.

See template used in example: Breakeven Analysis – ABC Company