Can someone please tell me the different ways to get break even? I researched on the internet and found BE in sales and units but they look like the exact same thing without any differentiation.
Having issues with breakeven equation
Overview of answers
Upvotes
Best answer
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!
Was this answer helpful?
Hi Anonymous,
I think this would be easier to answer if you provided the example you were stuck on?
Generally breakeven is just the time when:
revenue = cost
To break this down to what works in most cases:
price*annual volume sold*number of years = initial investment + fixed costs*number of years + variable cost*annual volume sold*number of years
Let me know if this doesn't apply to your example! :)
Kay
Was this answer helpful?
Hi,
Break even is when the volumes you sell allow you to cover your fixed cost.
Litteraly the fixed cost are payed by the margin you generate on each product sold.
Therefore
Break Even Volume = Fixed costs / (Price - variable costs)
Hope this helps
Best
Benjamin
Was this answer helpful?
Hi,
Its:
(Price - VC)*Q - FC = 0
Best!
Was this answer helpful?
Related Cases
Expert case by Antonello
Style:
A wealthy client has recently bought an island in the Caribbean. She has engaged us to identify possible uses for her new island.
A wealthy client has recently bought an island in the Caribbean. She has engaged us to identify possible uses for her new island.
(Open whole case)
16.3k
Times solved
Intermediate
Difficulty
Expert case by Francesco
Style:
Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client?
Our client is a BlissOttica, an Eyewear Manufacturer that is looking to reach a 10% increase in profits. How would you help our client?
(Open whole case)
13.6k
Times solved
Intermediate
Difficulty
Expert case by Gaelle
Style:
A restaurant owner is currently setting up a new restaurant and making some basic decisions on how to fit it out. Today he’s deciding on facilities in restrooms for customers to dry their hands. He has 3 options: Paper towels, Roller towels, and Hot Air dryers. What should he consider in his de
...
A restaurant owner is currently setting up a new restaurant and making some basic decisions on how to fit it out. Today he’s deciding on facilities in restrooms for customers to dry their ha
...
(Open whole case)
600+
Times solved
Intermediate
Difficulty
Content Creator
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut
68
Meetings
24,370
Q&A Upvotes
149
Awards
57 Reviews