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Build a cash break-even worksheet from collected revenue and cash operating costs. The layout separates depreciation from payments and shows how collection delays change the volume needed to cover a month.
A cash flow break even analysis template shows the sales volume whose collections cover cash operating payments in a defined period. Start with actual cash fixed costs, exclude noncash charges, and make collection timing explicit. The worksheet below can be copied into a spreadsheet; its example covers one month at a US industrial supplies business.
Operating cash break-even units = Fixed cash operating costs / Cash contribution per unit
Cash contribution per unit = Collected selling price per unit − Variable cash payment per unit
This adapts the SBA's break-even formula, which divides fixed costs by selling price less variable cost. The adaptation matters: a sale counts here when its cash arrives, and a cost counts when it is paid.
The simple version assumes all sales are collected in the month, variable costs are paid in the same month, and inventory is unchanged. It measures operating coverage before capital spending, debt service, taxes, and distributions. Keep those exclusions visible beside the result.
For the general distinction between accounting costs and sales, use break-even analysis. The separate cash break-even explanation owns the broader definition; this page supplies the worksheet and timing checks.
Bring a sales register, cash receipts export, expense ledger, payroll payments, and bank reconciliations for the same month. Keep transaction dates, account, document reference, amount, and whether each cost varies with units. Match receipts to invoices so sales and collections remain separate measures.
The example's fixed-cost selection is:
| Ledger category | Expense (USD) | Current cash payment (USD) | Treatment |
|---|---|---|---|
| Rent | 8,000 | 8,000 | Fixed cash cost |
| Salaried operating payroll | 18,000 | 18,000 | Fixed cash cost |
| Insurance | 1,000 | 1,000 | Fixed cash cost |
| Software subscriptions | 3,000 | 3,000 | Fixed cash cost |
| Depreciation | 6,000 | 0 | Exclude from cash costs |
| Total | 36,000 | 30,000 | Worksheet fixed-cost input |
The SEC's explanation of operating cash flows describes adding depreciation back when reconciling income to cash. That does not erase the equipment purchase: it keeps a noncash allocation separate from the original payment.
For this month, the expense and payment amounts happen to match except for depreciation. In a real export, prepaid insurance or an unpaid rent bill can make them differ. Use the payment due within the chosen period, with a documented assumption for forecast rows.
Column A contains the labels, column B the values or formulas. All money is USD. The unit is one standard shipment, sold for $100 with a variable cash cost of $60. No opening receivables are collected in the example.
| Cell | Input or output | Value or formula | Example result |
|---|---|---|---|
| B2 | Selling price per unit (USD) | Input | 100 |
| B3 | Variable cash payment per unit (USD) | Input | 60 |
| B4 | Fixed cash operating costs (USD) | Input | 30,000 |
| B5 | Share of current sales collected in month | Input | 100% |
| B6 | Receipts from opening receivables (USD) | Input | 0 |
| B7 | Cash contribution per current unit (USD) | =B2*B5-B3 |
40 |
| B8 | Whole units needed | =IF(B7<=0,"Review contribution",ROUNDUP(MAX(0,B4-B6)/B7,0)) |
750 |
| B9 | Current sales billed (USD) | =B8*B2 |
75,000 |
| B10 | Total receipts (USD) | =B9*B5+B6 |
75,000 |
| B11 | Variable cash payments (USD) | =B8*B3 |
45,000 |
| B12 | Operating cash surplus (USD) | =B10-B11-B4 |
0 |
These formulas work in Excel and Google Sheets. Enter B5 as a percentage. If B8 says to review contribution, resolve the input problem before using formulas that reference it. Covirage is not affiliated with Microsoft or Google.
B6 makes this a current-month cash coverage worksheet. Prior-period receipts reduce what current sales must fund, but do not demonstrate a sustainable operating run rate. For recurring break-even, set B6 to zero and use a steady collection and payment pattern.
At 750 units, receipts are 750 × $100 = $75,000. Variable payments are 750 × $60 = $45,000. Subtract fixed cash payments of $30,000 and the result is exactly zero.
The fixed-cost list also reconciles: $36,000 of expenses less $6,000 of depreciation equals $30,000 of cash costs. Accounting break-even, using those expenses, is $36,000 / $40 = 900 units. This is a difference in the question being answered, not a contradiction.
Round required units upward when the formula returns a fraction. Keep underlying currency calculations unrounded, then display dollars to the precision used in the source records. Whole units can leave a small positive surplus rather than an exact zero.
Now change only B5 to 80%. Assume the remaining sales are collected after this month, with no opening receivables to offset the delay. All variable payments still fall due immediately.
| Monthly case | Units | Billed sales (USD) | Cash collected (USD) | Variable payments (USD) | Fixed payments (USD) | Net cash (USD) |
|---|---|---|---|---|---|---|
| Original timing | 750 | 75,000 | 75,000 | 45,000 | 30,000 | 0 |
| Slower collections, original volume | 750 | 75,000 | 60,000 | 45,000 | 30,000 | -15,000 |
| Slower collections, coverage volume | 1,500 | 150,000 | 120,000 | 90,000 | 30,000 | 0 |
Cash contribution falls to $100 × 80% − $60 = $20. Required volume becomes $30,000 / $20 = 1,500 units. This is a transition-month result; later receipts require their own schedule. Use cash flow scenario analysis to compare explicit timing assumptions across periods.
The existing 13-week cash flow template supports a dated receipts-and-payments schedule. This page provides an on-page break-even layout rather than a separate downloadable workbook.
Bring your expense and collections workbook or Google Sheet with its timing assumptions. Covirage maps the columns; its tools compute and check cash costs, contributions, and coverage, while the external AI model explains the result with every figure traced to its rows. Create a free Covirage account and bring a sample of your own export.
See Covirage for finance teams for the wider reporting context.
Depreciation is excluded from the period's cash operating payments because recording it does not move cash. Equipment purchases belong in a separate capital spending schedule. Their payment dates can create a cash shortage even when operating cash break-even has been reached.
Yes. Removing a noncash expense reduces the costs that current cash receipts must cover. Collection delays can reverse that result, however. An invoice may contribute to accounting profit before the customer pays, while payroll and supplier invoices already require cash.
Use an agreed sales mix and calculate the cash contribution of that mix. Keep collection timing and variable payment assumptions visible for each product. A single blended contribution is useful only while those assumptions remain valid; recalculate it when the mix changes.
No. Operating break-even excludes movements such as debt principal, equipment purchases, and owner distributions unless you deliberately add them to a broader cash coverage target. It also measures a period total, which can hide a shortage before customer receipts arrive.