Statistical Simulation of the Break-Even Point in the Margin Analysis of the Company
Statistical Simulation of the Break-Even Point in the Margin Analysis of the Company

Summary/Abstract: The article defines the role and place of the task of finding the break- even point in margin analysis of a company's activity. The basic assumptions and limitations of the main known methods in this field have been formulated. In order to develop the theoretical and practical aspects of solving the given task, the authors have suggested an approach to determining the breakeven point based on imitative statistical simulation (Monte Carlo method). The proposed approach is based on a logical scheme of imitative statistical simulation, adapted for completing the task of finding the break- even point. The logical scheme is brought to the level of practical implementation in the form of a computer model in the environment of MS Excel spreadsheet that includes three sub- models: a break- even point calculation model, based on the known calculating ratios of the margin analysis; a random factors impact model specifying different laws for the distribution of random variables; a statistical processing that model includes a module for calculating typical statistical characteristics (average deviation, standard deviation, confidence intervals, etc.), and a module for selecting and viewing scenarios with the most relevant values of output indicators, which are most consistent with the current production and market conditions.

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