Is it possible to calculate the BEP with the investment instead of the fix costs?

Anonym A fragte am 18. Jun 2019

What's the formula?

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Daniel antwortete am 18. Jun 2019
Imperial College PhD, Rolls-Royce Project Engineer, RWTH Aachen Mechanical Engineer and Business Administrator, Software Engineer

Hi,
it depends on how you define break-even point. Sometimes it is considered as the point where you have zero profits. However, you see it also at times defined as the number of years after you've regained your initial investment through profits over the life-span of a project. I personally disagree with the latter definition and wouldn't use it, but you encounter it in the casebooks, and you should be prepared for it. If fix costs do not play a role, then obviously disregard them. Always ask what is meant by break-even point as the term is at least in the English literature ambiguous, whereas in the German literature it always means the point of zero profits where the break-even sales volume is usually sought.

Hope this help!
Best,
Daniel

Sidi
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antwortete am 18. Jun 2019
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Of course. You can calculate a break even point for any fixed reference (fixed yearly costs, investment spend, input utilized, etc.) and any variable (break even volume, break even price, break even duration, etc.).

Cheers, Sidi

Vlad bearbeitete seine Antwort am 19. Jun 2019
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Hi,

Investment = source of cash

Fixed costs = use of cash

If you know that the investment is allocated to cover fixed costs for a certain period, then you can calculate the BE for the business:

Formula: (Price - VC)*Q-FC = 0

You can also calculate the breakeven for a specific investment amount as well. In that case, the formula will be: (Price - VC)*Q-FC = INV

Best!

(editiert)

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