Enrolled: 2 students
Duration: 2 hours
Lectures: 11
Video: 2 hours
Level: Advanced

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What is the Breakeven Point (BEP)?

In accounting, 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. Put differently, the breakeven point is the production level at which total revenues for a product equal total expenses.

As a simple equation it may be, practically its error-prone and very difficult to understand and interpret the results of break-even analysis. This course will explain the practical assumptions businesses need to make, sensitivity analysis of all assumptions, scenario planning to understand the impact of different business models.

We will also look at practical difficulties in calculating the breakeven points through a detailed model on the hospitality business. Though an example related to hotels, principals can be applied to all businesses.

What you’ll learn

  • fundamentals of breakeven points
  • how to calculate breakeven points
  • what are assumptions
  • how to segregate fixed and variable costs
  • understanding impact of break even points
  • sensitivity analysis of breakeven points

Are there any course requirements or prerequisites?

  • Basic Maths

Who this course is for:

  • managers
  • small business owners
  • executive management staff who need to make strategic decisions
  • finance executives

Basics

1
What is Breakeven Point
2
Practical Example to Understand Formula and Calculation
3
Putting Calculations in Excel and Scenario Planning

Advanced Version of Breakeven Points

1
What are assumptions of Breakeven and how they can go wrong
2
Sensitivity Analysis of Breakeven Point assumptions

Practical Exercise to create a breakeven point for Hotels

1
Gather Data for Hotel P&L
2
Establish Relation ship in P&L Items to understand Business better
3
Starting Model with revenue segregation and setup
4
Modelling Cost of Sale and Payroll Expenses for Rooms, F&B and others
5
Other Hotel expenses, depreciation and Tax
6
Playing around to calculate Breakeven points with different combinations
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