Introduction
The basics of breakeven analysis
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1. Importance of Analysis
Importance of breakeven analysis
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Cost-volume-profit (CVP) analysis
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2. Types of Costs
When variable costs become fixed costs
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Breaking down fixed and variable costs
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Fixed and variable cost examples
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Pricing a service to cover costs
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3. Contribution Margin and the CVP Equation
Identifying high contribution margins
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Contribution margin and profitability
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Calculate a company's breakeven point
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McDonald's breakeven point
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4. The Breakeven Equation
When to conduct breakeven analysis
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Breakeven equation and covering costs
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Breakeven equations for an airline
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Breakeven analysis for multiple products
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5. Computing Target Net Income
Importance of total contribution margin
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How to forecast a target profit
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Calculate McDonald's target profit
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6. Sensitivity Analysis
Analyzing a business before making changes
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What-if analysis for multiple scenarios
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Lessons for running a profitable company
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Conclusion
Risks and rewards of fixed costs
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Glossary_RunningProfitableBusiness_CalculatingBreakeven.zip
(134 KB)