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Breakeven

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New answer on Sep 01, 2023
3 Answers
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Anonymous A asked on Aug 14, 2019

Hello,

Can you please clarify how you came up with the breakeven number?

Thanks

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Clara
Expert
Content Creator
replied on Sep 01, 2023
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

Precisely for the high amount of questions (1) asked by my coachees and students and (2) present in this Q&A, I created the “Economic and Financial concepts for MBB interviews”, recently published in PrepLounge’s shop (https://www.preplounge.com/en/shop/prep-guide/economic_and_financial_concepts_for_mbb_interviews).

After +5 years of candidate coaching and university teaching, and after having seen hundreds of cases, I realized that the economic-related knowledge needed to master case interviews is not much, and not complex. However, you need to know where to focus! Hence, I created the guide that I wish I could have had, summarizing the most important economic and financial concepts needed to solve consulting cases, combining key concepts theorical reviews and a hands-on methodology with examples and ad-hoc practice cases.

It focuses on 4 core topics, divided in chapters (each of them ranked in scale of importance, to help you maximize your time in short preparations):

  • Economic concepts: Profitability equation, Break even, Valuation methods (economic, market and asset), Payback period, NPV and IRR, + 3 practice cases to put it all together in a practical way. 
  • Financial concepts: Balance sheet, Income statement/P&L and Performance ratios (based on sales and based on investment), +1 practice case
  • Market structure & pricing: Market types, Perfect competition markets (demand and supply), Willingness to pay, Pricing approaches, Market segmentation and Price elasticity of demand, +1 practice case
  • Marketing and Customer Acquisition: Sales funnel, Key marketing metrics (CAC and CLV) and Churn, +1 practice case

Feel free to PM me for disccount codes for the guide, and I hope it helps you rock your interviews! 

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Paul
Expert
replied on Aug 14, 2019
PL-level BCG experience (6 years)|Interviewer at BCG| 6/6 personal + 95%+ candidates offer success rate

Hi,

breakeven (sales) = Sales it takes to make Profit = 0 (all cost included)

therefore

(Unit Price - Unit Variable cost) X (Breakeven Quantity) = Other (fixed) costs

Therefore

Breakeven quantity = Other fixed costs / (Unit price - unit variable cost)

hope it helps.

Paul

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Ivan replied on Aug 14, 2019

Tom Ford is well-known for male fashion; therefore, the number should be low.

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Clara

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McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
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