Corporate Finance #4 Leverage & Break-Even Analysis

Name: Corporate Finance #4 Leverage & Break-Even Analysis
Rating: 4.2 (99 reviews)

Unleash Financial Potential: Master Leverage and Break-Even Analysis for Growth and Profitability

Created byRobert (Bob) Steele

Last updated 7/2026

English

English [Auto],

What you'll learn

Define the concept of leverage and its significance in corporate finance decision-making.
Analyze the different types of leverage, including operating leverage, financial leverage, and combined leverage, and their impact on business growth.
Apply leverage ratios and formulas to assess the optimal level of leverage for a business.
Evaluate the benefits and risks associated with leverage and make informed decisions based on leverage analysis.
Understand the concept of break-even analysis and its importance in decision-making.
Differentiate between fixed costs and variable costs and classify costs accordingly for break-even analysis.
Calculate the break-even point and cash break-even point using relevant formulas and techniques.
Analyze and interpret the results of break-even analysis to determine the financial viability of a business.
Apply nonlinear break-even analysis methods to assess the impact of changing variables on break-even points.
Utilize Excel worksheets and financial modeling techniques to conduct leverage and break-even analysis efficiently.

Course content

3 sections • 41 lectures • 11h 45m total length

505 Leverage Overview16:54
Explore the concepts of leverage in corporate finance, including operating and financial leverage, fixed versus variable costs, and the break-even analysis that magnifies or mitigates outcomes under different conditions.
510 Break Even Analysis15:14
Classify costs as fixed or variable and compute the break even point from fixed costs and contribution margin per unit. Apply to future projections and cash-break-even analysis in Excel.
515 Degree of Operating Leverage9:29
Study the degree of operating leverage, comparing fixed and variable costs, and apply the contribution margin framework for percent change in operating income per percent change in units sold.
520 Financial Leverage10:38
Explore how financial leverage amplifies outcomes through debt in the capital structure, compare debt-driven and operating leverage, and assess risk, industry benchmarks, and conditions for optimal use.
525 Combined Leverage8:55
Explore combined leverage by analyzing operating and financial leverage, using contribution margin methods to magnify profits or losses and compare asset and debt structures.

OneNote Resource0:01
511 Break Even Analysis18:41
Learn break-even analysis by modeling fixed and variable costs, calculating the break-even point in units using contribution margin, and projecting future profits with scenario analysis.
512 Break Even Point & Fixed & Variable Cost14:08
Learn break-even analysis by calculating break-even units, separating fixed and variable costs, and applying contribution margin per unit for projections and a contribution margin income statement.
515 Break Even Analysis Projection Plan17:05
Apply break-even analysis to project and compare scenarios, adjusting fixed and variable costs, calculate contribution margins, and determine break-even units under plan a and plan b.
517 Cash Break Even Point12:25
Learn cash break-even by excluding depreciation from fixed costs, computing cash fixed costs, then dividing by unit contribution margin to find units needed to cover cash outlays.
520 P1 Degree of Operating Leverage, Degree of Financial Leverage, & Combined Le24:22
Explore degree of operating leverage via a contribution-margin income statement, three formulas, and the impact of fixed versus variable costs, part one of two.
520 P2 Degree of Operating Leverage, Degree of Financial Leverage, & Combined Le15:58
Explore how to compute the degree of operating leverage, degree of financial leverage, and their combination using a contribution margin income statement, with break-even analysis insights.
521 P1 Second Degree of Operating Leverage, Degree of Financial Leverage, & Comb18:16
Delve into the degree of operating leverage, degree of financial leverage, and combined leverage through a practice problem using a contribution-margin income statement, fixed versus variable costs, and ebit.
521 P2 Second Degree of Operating Leverage, Degree of Financial Leverage, & Co13:22
Explore the degree of operating leverage, degree of financial leverage, and combined leverage via a practice problem; examine fixed vs variable costs, contribution margin, and break-even analysis.
522 Degree of Leverage Problem 119:46
Compute the degree of operating leverage, degree of financial leverage, and combined leverage at 25,000 and 40,000 units. Analyze how sales volume shifts leverage alongside break-even insights.
523 Degree of Leverage Problem 219:06
Explore how break-even points, contribution margins, and fixed versus variable costs drive the degree of operating, financial, and combined leverage as sales rise from 20,000 to 35,000 units.
524 Nonlinear Breakeven Analysis8:56
Explore nonlinear breakeven analysis with two scenarios: up to 107k units at $18 and $9 variable cost, then above with $14 and $10 and fixed costs of $60k.
525 Degree of Operating Leverage Alternative Formula14:03
Demonstrate the degree of operating leverage using the alternative formula: percent change in operating income over percent change in sales. Contrast with the contribution margin method on standard income statements.
528 Price Earnings Ratio Comparison for Companies with Different Leverage14:09
Compare two companies with identical operating income and assets but different leverage, and analyze how debt versus equity financing affects earnings per share and price-earnings ratio.
531 Leverage Ratios & Projected Expansion Scenarios17:34
Calculate operating, financial, and combined leverage from a projected expansion, compare debt and equity financing (bonds vs stock), and assess effects on income, taxes, and earnings per share.

511 Break Even Analysis17:43
Learn to perform break-even analysis in Excel by separating fixed and variable costs, calculating a 33 per-unit contribution margin, and computing break-even units to cover 105,000 fixed costs.
512 Break Even Point & Fixed & Variable Cost19:52
Explore break-even analysis with fixed and variable costs in Excel. Learn the contribution margin approach and how fixed costs and unit sales determine break-even points.
515 Break Even Analysis Projection Plan24:30
Explore break-even analysis in Excel within a projection plan, comparing scenarios that adjust fixed costs and variable costs to reveal break-even units and contribution margin.
517 Cash Break Even Point17:50
Learn how to compute the cash break-even point in Excel by adjusting fixed costs to exclude depreciation, and apply unit contribution margin to determine required units.
520 P1 Degree of Operating Leverage, Degree of Financial Leverage, & Combined Le24:22
Study the degree of operating leverage, degree of financial leverage, and combined leverage in Excel, using a contribution margin framework, and examine break-even units across scenarios.
520 P2 Degree of Operating Leverage, Degree of Financial Leverage, & Combined Le21:42
Explore how to compute degree of operating leverage, degree of financial leverage, and combined leverage in Excel, using EBIT, earnings before taxes, and the break-even analysis with contribution margins.
521 P1 Second Degree of Operating Leverage, Degree of Financial Leverage, & Comb23:45
Learn to compute operating, financial, and combined leverage in Excel using a contribution-margin framework. Explore break-even units and how sales shifts impact EBIT under varying cost structures.
521 P2 Second Degree of Operating Leverage, Degree of Financial Leverage, & Comb19:50
522 Degree of Leverage Problem 130:35
Explore an excel-based corporate finance practice that computes break-even point and degree of operating, financial, and combined leverage via a contribution margin income statement under 25,000 and 40,000 unit scenarios.
523 Degree of Leverage Problem 228:57
Develop Excel-based skills in break-even analysis and leverage, calculating contribution margin, operating and financial leverage, and combined leverage for 20,000 and 35,000 units.
524 Nonlinear Breakeven Analysis11:55
Explore nonlinear breakeven analysis in excel by modeling price and variable cost changes after 107,000 units, using a contribution margin framework and side-by-side scenario comparisons.
525 Degree of Operating Leverage Alternative Formula23:14
Discover calculating the degree of operating leverage with an alternative formula using percent changes in operating income and sales, using a contribution margin income statement in Excel.
526 Financial Leverage & Earnings Per Share18:09
Explore how financial leverage affects earnings per share through an Excel-based practice, comparing debt and equity scenarios and multiple EBIT levels in a leverage and break-even analysis context.
527 Using Price to Earnings Ratio PE Ratio to Calculate Market Price5:55
Calculate market price from earnings per share using the price-earnings ratio. Derive earnings per share from net income after taxes, then apply the P/E ratio to estimate the market price.
528 Price Earnings Ratio Comparison for Companies with Different Leverage13:39
Explore how leverage shapes the price-earnings ratio by comparing two debt versus equity structures in Excel, calculating EPS and stock price across scenarios A and B.
531 Leverage Ratios & Projected Expansion Scenarios24:51
Analyze the degree of operating, financial, and combined leverage before and after a $2.5 million expansion. Compare debt financing via 9% bonds with stock financing and assess impact on EPS.
533 P1 Leverage Analysis Problem 1 Part 115:06
Explore leverage analysis by comparing debt-focused and equity-focused financing for a 12 million asset base. Assess EBIT, taxes, and earnings per share across scenarios.
533 P2 Leverage Analysis Problem 1 Part 214:54
Analyze leverage through debt vs equity scenarios in a corporate finance Excel practice, comparing earnings per share, returns on assets, taxes, and share repurchases.
534 P1 Leverage Analysis Problem 2 Part 114:12
Explore leverage analysis in Excel by evaluating debt-focused and equity-focused refinances for a 30,000 asset base, calculating earnings after taxes and EPS under varied rates.
534 P2 Leverage Analysis Problem 2 Part 218:24
Explore leverage analysis scenarios in corporate finance by modeling debt- and equity-financed options in Excel to analyze earnings per share under varying return on assets and interest rates.
535 Financing Plans to Increase Assets26:41
Compare debt-focused and equity-focused financing plans to raise assets from 12,000 to 25,000, maintaining 10% return on assets, and assess earnings after taxes, EPS, and degree of financial leverage.

Requirements

Basic understanding of financial statements, including familiarity with balance sheets, income statements, and cash flow statements.
Access to a computer or laptop with internet connectivity to access course materials and practice exercises.
Eagerness to learn and apply leverage and break-even analysis concepts in a corporate finance context.
Openness to hands-on practice and willingness to work with Microsoft Excel or similar software to solve practice problems.
Curiosity and a desire to enhance financial decision-making skills and optimize business growth and profitability.

Description

In this comprehensive course, we will delve into the essential concepts of leverage and break-even analysis from a corporate finance perspective, equipping you with the skills to make informed decisions that drive growth and maximize profitability.

Leverage plays a pivotal role in corporate finance decision-making, and finding the optimal level of leverage is a subject of ongoing debate. By understanding and applying leverage effectively, businesses can accelerate their growth and financial success. Throughout the course, we will explore the concepts of operating leverage, financial leverage, and combined leverage, providing practical practice problems that reinforce these critical concepts.

Break-even analysis is a fundamental tool in decision-making, enabling us to assess the point at which costs and revenues are in equilibrium. You will gain a deep understanding of break-even analysis, including the categorization of costs as fixed costs and variable costs based on their behavior. This approach, though different from the traditional functional categorization, allows us to assess cost changes in relation to production levels and make informed projections for the future.

We will guide you through the calculation of the break-even point and the cash break-even point, offering insights into nonlinear break-even analysis. You will develop proficiency in utilizing these tools to evaluate financial performance, assess risk, and make strategic decisions.

Throughout the course, you will encounter numerous practice problems, many of which include downloadable Excel worksheets. Each Excel worksheet will consist of at least two tabs—one with the answer key and the other preformatted to facilitate step-by-step practice along with instructional videos. This hands-on approach will enhance your learning experience and provide practical application of leverage and break-even analysis concepts.

Join us on this dynamic journey to master leverage and break-even analysis in corporate finance. Enroll today to develop the skills to optimize decision-making, leverage resources effectively, and evaluate financial breakeven points for growth and profitability. By the end of the course, you will be equipped to make informed decisions that drive financial success in a competitive business environment.

Who this course is for:

Finance professionals and analysts seeking to deepen their knowledge and skills in leverage and break-even analysis for effective financial decision-making.
Accounting professionals who want to expand their understanding of leverage and break-even analysis concepts and their applications in corporate finance.
Business owners and entrepreneurs aiming to optimize their financial decision-making and enhance business growth and profitability.
Financial managers and executives involved in corporate finance, budgeting, and strategic planning, looking to strengthen their expertise in leverage and break-even analysis.
Students pursuing degrees or certifications in finance, accounting, or related fields, who want to gain practical skills in leverage and break-even analysis.
Investment professionals interested in evaluating investment opportunities and assessing risk through leverage and break-even analysis.
Individuals transitioning into finance or accounting roles who want to develop a solid foundation in leverage and break-even analysis techniques.
Anyone with an interest in corporate finance, financial decision-making, and maximizing profitability through effective analysis and decision-making.

Corporate Finance #4 Leverage & Break-Even Analysis

What you'll learn

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Course content

Introduction5 lectures • 1hr 1min

Practice Probs - Leverage & Break-Even Analysis15 lectures • 3hr 48min

Excel Probs - Leverage & Break-Even Analysis21 lectures • 6hr 56min

Requirements

Description

Who this course is for: