This tool is designed to evaluate a company’s ability to generate profits and manage its fixed and variable costs.
It also serves to visualise a company's breakeven point and the margin of safety between current revenue levels and the breakeven point.
Three key profitability margins are displayed at the top of the tool: Gross profit, Operating profit, and Earnings before Interest and Tax (EBIT).
You can click on each of these key numbers to drill down into more detail.
The Breakeven point represents the revenue level at which the business neither makes a profit nor takes a loss. In other words, if the company were to make one more dollar, it would profit, but if it made one less, it would incur a loss.
Fathom calculates the Breakeven point as:
Breakeven Point = Fixed Costs / (1 - (Variable Costs / Revenue))
Margin of Safety
The Breakeven Margin of Safety represents the margin between the actual sales level and the breakeven point. In other words, it is the amount by which sales can drop before losses begin to be incurred. The higher the margin of safety, the lower the risk of incurring losses.
Top ten accounts
Underneath the total Revenue and total Costs key numbers, you can select to view the top ten Revenue and Cost accounts by volume in descending order to see which accounts are generating the most income, and how the business is managing its major expenses and costs of sales.
Choosing a date range
At the top of the tool, you can choose to view results for any month, quarter or year. You can also view results for month-to-date (MTD), quarter-to-date (QTD) or year-to-date (YTD) periods, and select the ending month for these periods.