break-even point

(noun)

The point where total costs equal total revenue and the organization neither makes a profit nor suffers a loss.

Examples of break-even point in the following topics:

  • Break-Even Analysis

    • The break-even point (BEP) is the point where expenses and revenue intersect.
    • In the linear model, the break-even point is equal to the fixed costs divided by the contribution margin per unit .
    • By inserting different prices into the formula, you will obtain a number of break-even points, one for each possible price point.
    • The break-even point is one of the simplest yet least used analytical tools in management.
    • This graphs depicts an example of a break-even point based on sales and total costs.

  • Break-Even Analysis

    • The break-even point is the point at which costs and revenues are equal.
    • In economics and business, specifically cost accounting, the break-even point is the point at which costs or expenses and revenue are equal - i.e., there is no net loss or gain, and one has "broken even" .
    • Thus the break-even point can be more simply computed as the point where Total Contribution = Total Fixed Cost:
    • The break-even point is one of the simplest analytical tools in management.
    • Analyze the concept of break even points relative to pricing decisions

  • Break-Even Analysis

    • In economics and business, the break-even point (BEP) is when costs (or expenses) and revenues are equal: there is no net loss or gain and the business has "broken even" by earning back its costs.
    • Break-even analysis lets companies compare their production or sales with the minimum point (the break-even point) they need to achieve in order to stay in business.
    • Typically, companies want to produce above BEP in order to make a profit and will adjust their output level to surpass the break-even point.
    • Break-even points can be determined based on sales and total costs.
    • Employ a break-even analysis and derive a break-even point when analyzing a business initiative or project

  • Benefits and Risks of Operating Leverage

    • The use of operating leverage can multiply profits when a given break-even point is reached, but it can intensify losses when it is not.
    • Therefore, once a certain break-even point is reached, the contribution that sales make to profits is much higher than it would be if a greater portion of the costs were variable.
    • Problems can arise if a company has very high fixed costs, and if a company has difficulty selling enough units to break even on a particular investment.
    • Just as the use of operating leverage can lead to greater profits, if a company is able to reach a given, break-even point, so too can the use of leverage drastically multiply losses if that point is not reached.

  • Break-Even Analysis

    • The key to understanding the appropriate amount of operating leverage lies in analysis of the break-even point.
    • Break-even analysis tells a company how much it needs to sell in order to pay for an investment-- or at what point expenses and revenue are equal.
    • When sales have exceeded the break-even point, a larger contribution margin will mean greater increases in profits for a company.
    • By inserting different prices into the break-even formula, you will obtain a number of break-even points-- one for each possible price charged.
    • In the above graph, points A, B, and C are the break-even points.

  • Financial Applications of Quadratic Functions

    • The method of graphing a function to determine general properties can be used to solve financial problems.Given the algebraic equation for a quadratic function, one can calculate any point on the function, including critical values like minimum/maximum and x- and y-intercepts.
    • A graph contains all the above critical points and more, and acts as a clear and concise representation of a function.
    • If one needs to determine several values on a quadratic function, glancing at a graph is quicker than calculating several points.
    • If a financier wanted to find the number of sales required to break even, the maximum possible loss (and the number of sales required for this loss), and the maximum profit (and the number of sales required for this profit), they could simply reference a graph instead of calculating it out algebraically.
    • The break-even points are between $15$ and $16$ sales, and between $484$ and $485$ sales.

  • Working capital analyses

    • But even a business that is not seasonal occasionally experiences peak months when orders are unusually high.
    • A break even analysis is designed to show you how much revenue must be generated to cover your fixed and variable costs.
    • Revenue below the breakeven point means the business is losing money and revenue above the breakeven point means the business is profitable.
    • In order to calculate the breakeven point you will need to know three things:
    • This calculation will let you know how many units of a product you will need to sell to break even.

  • Boiling & Melting Points

    • Thus, in order to break the intermolecular attractions that hold the molecules of a compound in the condensed liquid state, it is necessary to increase their kinetic energy by raising the sample temperature to the characteristic boiling point of the compound.
    • The melting points of crystalline solids cannot be categorized in as simple a fashion as boiling points.
    • Spherically shaped molecules generally have relatively high melting points, which in some cases approach the boiling point.
    • Notice that the boiling points of the unbranched alkanes (pentane through decane) increase rather smoothly with molecular weight, but the melting points of the even-carbon chains increase more than those of the odd-carbon chains.
    • Even-membered chains pack together in a uniform fashion more compactly than do odd-membered chains.

  • Freezing Point Depression

    • Freezing point depression is the phenomena that describes why adding a solute to a solvent results in the lowering of the freezing point of the solvent.
    • In order to achieve a solid, the solution must be cooled to an even lower temperature.
    • In this equation, $\Delta T_f$ is the freezing point depression, Kf is the freezing point depression constant, and i is the van 't Hoff factor.
    • To solve this, you must remember that NaCl breaks into two ions, Na+ and Cl-, when it dissolves in water.
    • The value of 0.93 oC is the change in the freezing point.

  • Phase Changes and Energy Conservation

    • But the heat added does not change the temperature; that heat energy is instead used to break intermolecular bonds and convert ice into water.
    • At this point, there is a mixture of both ice and water.
    • At the boiling point, temperature no longer rises with heat added because the energy is once again being used to break intermolecular bonds.
    • A pressure cooker (or even a covered pot) will cook food faster because the water can exist as a liquid at temperatures greater than 100ยบ C without all boiling away.
    • The curve ends at a point called the critical point, because at higher temperatures the liquid phase does not exist at any pressure.