Breakeven Multiple

A reverse analysis that determines how much of an asset’s value needs to be multiplied to break even.

Breakeven multiple is a reverse break-even point (BEP) analysis used to determine the number of times the price of an asset can be multiplied before it can match operating costs. In other words, the technique is used by traders and investors to measure the futuristic potential of an asset with respect to gaining its highest historical value. A unit of an asset V that is currently worth $6, for example, needs a 100% increase to return to its all-time high value of $12. 2 is thus the breakeven multiple of the asset V.

Breakeven multiple analysis is one of the many analytical methods used to measure the relevance of an asset. If the breakeven multiple is too large, it is generally assumed that the asset in question is no longer as valuable compared to another asset with a smaller breakeven multiple.