Contents
Unit 3: Personal and Business Finance
Module objectives
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Objectives
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Cash flow forecasts
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Cash flow forecasts
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Preparing cash flow forecasts
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Using cash flow forecasting
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Benefits and limitations of cash flow forecasting.
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Case Study: External impacts on cash flow
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Break-even
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Break-even analysis
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Break-even forecast: Costs
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Revenue
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Calculating the break-even point
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Calculating a break-even point – using the contribution method
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Calculating the break-even point – using a break-even chart
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Identifying the area of profit, loss and the margin of safety
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Using a break-even chart
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Case study: Break-even
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Module 5: Cash flow forecasting and break even

Using a break-even chart

 

You can use a break-even chart to plan, monitor, maintain control and set targets. A break-even chart is often included in a business plan.

In the case of Rholiau Rhian above, the break-even chart is useful to see if the number of sandwiches that need to be sold each month is realistic.

It is also possible to see what happens if the price is increased or decreased.

Pause for thought

Calculate how many sandwiches Rholiau Rhian would need to sell each month if the price were raised to £4.00 per sandwich.

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