Scientific paper ID 655 : 2012/1

Break-even point analysis is a widely used approach to investigate changes regarding financial result depending on changes of freight transport volume. Also this method allows to analyse the influence of some factors such as selling price, variable costs and fixed costs on the financial result.

This article discusses the application of Break-even point analysis to study operating costs in freight rail services. Through this analysis the freight transport volume at which the operating costs are equal to revenues could be determined. Thus, an effectiveness threshold of company?s transport activity could also be obtained.

The application of the analysis is demonstrated by data for a sample rail freight company. Based on information for six years, the break-point for each year is obtained and the results are interpreted.

Using results obtained by the break-even point analysis, uncertainty indicators are computed by which the level of economic risk in the company is determined. Some mitigating measures for its reduction are proposed.