What does it mean to Break -Even point to company or business?

[Mataracy]

Break even point can be defined or described as a situation where a company or business neither make profit nor loss.
Break even point is the volume of sales required in a period ( such as the financial year) to break even' and make neither a profit nor a loss. At the break even point, profit is 0.

Some time management might want to know what the break even point is.

(1) one need to identify the minimum volume of sales that must be achieved in order to avoid a loss or

(2) assess the amount of risk in the budget,by comparing the budgeted volume of sles with the break-even volume.

There are two method one can use to calculate it whether one is at the break-even point or not.

(1) Break - even point expressed as a number of units.
Break-even point in sales unit=Total fixed cost÷ contribution per unit.

Fixed costs are the same as the total contribution required to break-even ,ans the break- even point can therefore be calculated by dividing the total contribution required(total fixed costs) by the contribution per unit.
Remember to include any variable selling and distribution Costa in the calculation of the variable cost per unit(I.e unstatic cost) and contribution per unit.
So onece the break-even point is calculated as a number of units it is easy to express it in terms of revenue by multiplying the number of units by the selling price per item.

(2) Break even point expressed in sales revenue. The second method calculates the break -even point in sales revenue.
Break-even point expressed in sales revenue.
Break-Even point in revenue= Fixed cost ÷ contribution to sales ratio.

This are the ways in which a company or an individual to know whether is at the break even point. And this usually help company to know whether to leave one business or not so that they will not loss all their resources on a business.
As you can see now that its very advisable now to have a professional hand in one company or business

 

[Alexandoy]

The main objective of a business is to earn profit. When it achieves only the break-even point that means the business is not earning. There are hidden expenses that may surprise you so the business that is on a break-even point can be considered losing. When the tax payment is computed then that will affect the profitability.

 

[Mataracy]

The main objective of a business is to earn profit. When it achieves only the break-even point that means the business is not earning. There are hidden expenses that may surprise you so the business that is on a break-even point can be considered losing. When the tax payment is computed then that will affect the profitability.

Yeap,though at the break -even point point the business is not making profit and at the same time it not making loss yet. This happen because at that point all expenses incurred had been removed in tax after profit and later arrive the total amount invested but not lesser than that of what he has invested in business .

 

[Sherman198]

I don't believe that the break-even that means no loss and no profits actually means no loss. If you calculate all the energy wasted, and some transportation expenses or fuel expenses, you can still see that at break-even point you are still at loss. Nothing like no loss, no profits. You must have wasted something. So it's better you work towards making profits than arriving at break-even point.

 

[Augusta]

Breaking even to me is the point by which a business begins to excel and I think this is like a growth for the business. New businesses always want to get to this point where they break even. For a business that wants to be more progressive seeking professional help will be very usefulness

 

[Setho]

In many companies the break-even point is when they do not make any profit or loss or when the difference between profit and loss is not that much. In many startup companies they mostly try to keep their portfolio at break-even point or close to it during the first few years of them being in active service.