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Break-Even Analysis Unlocked: How to Understand the Profit and Loss Statement

Find out how to predict business profitability, the break-even point and the margin of safety with powerful financial tools.

Break-Even Analysis Unlocked: How to Understand the Profit and Loss Statement
  • Duration2 weeks
  • Weekly study5 hours
  • 100% onlineTry this course for free
  • Included in an ExpertTrackCourse 3 of 5
  • Get full ExpertTrack access$39/month

How do you know when a business will become profitable? And can you predict business risk and potential losses? Every successful company runs different financial analyses before making investment decisions. Break-even analysis helps these companies to ensure their survival in the short term.

On this course, you’ll have the opportunity to cover everything that a comprehensive break-even analysis entails. You’ll have the chance to learn how to understand the different classifications of cost and how they relate to business stability.

You’ll also find out how to evaluate the feasibility of business ideas and their potential for success by calculating and applying the break-even point, or BEP.

Learn how to read a profit and loss statement

Want to know how to analyse a profit and loss (P&L)? This course will teach you what you need to know about the P&L statement – from sources of income and sales and seasonality to the all-important bottom line: net profitability.

Find out how to calculate margin of safety

What is the margin of safety? Simply put, it’s the amount that sales can fall before the break-even point is reached and the business makes no profit. This calculation also tells a business how many sales it has made over its BEP.

This course explores the principles of margin of safety and profit, and look at the output for required profit.

You’ll also carry out exercises on break-even analysis using formulas and templates, and be introduced to operational gearing (or operational leverage) – the relationship between a firm’s fixed and variable costs.

What topics will you cover?

  • Identify the definitions of cost and their relationship with business sustainability
  • Gain an understanding of break-even analysis and its method
  • Learn how to calculate the break-even point
  • Get introduced to the concept of margin of safety and its importance
  • Gain an understanding of operational gearing and what this means for a business

What will you achieve?

By the end of the course, you‘ll be able to...

  • Calculate and apply break-even point, margin of safety and profit
  • Describe contribution and explain its importance
  • Evaluate the effect of operational gearing on risk and profit
  • Explain the difference between fixed, variable and semi variable costs
  • Explore the concept of operational gearing and explain its importance

Who is the course for?

This ExpertTrack is designed for anyone looking to build their financial data analysis and interested in using data for business decision making.

It will be of particular interest to people in senior management and leadership roles who lack an accounting background, especially if you wish to learn the skills to help you make better decisions and advance your career.

Who developed the course?

Coventry University

Coventry secured gold in the UK Government’s 2017 Teaching Excellence Framework (TEF) and is University of the Year for Student Experience in The Times & The Sunday Times Good University Guide 2019.

  • Established1992
  • LocationCoventry

About this ExpertTrack

Unlock the financial and organisational potential of a business with balanced scorecards and other strategic analysis tools.

Start learning today - free 7-day trial

After your free trial you can:

  • Pay $39 per month to keep learning online
  • Have complete control over your subscription; you can cancel any time
  • Work at your own pace and set your own deadlines at every stage
  • Only pay while you’re learning; the subscription will cancel automatically when you finish
  • Complete online assessments to test your knowledge and prove your skills
  • Earn digital course certificates and a final award that you can share online, with potential employers, and your professional network
  • Keep access to the content of courses you complete even after your subscription ends