Break-even point

Break-even point is a point where a company faces a win-win situation; Means Company’s all debts are paid and gain no income. There is loss or profit at this point.  Break-even point is a term used in financial analysis. A company can have a lower or higher break-even point.

The calculating break-even point is a little bit risky for business owners. If company variable and fixed costs details are there then only you can calculate the break-even point of the company.

Breakeven point = Fixed costs / Price – Variable costs

Fixed costs – Not depend on sales quantity. For example – Office rent, Machinery cost etc.

Variable Cost – Depend on sales quantity.

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