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

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.