Break even
Also called: break-even point(BEP) or profitability threshold
Break-even is a situation in which a company makes no profit and no loss. The result, after deducting all expenses from sales, is exactly zero. Revenues and expenses are exactly balanced. The moment when this is reached is also called the break-even point.
This zero result can apply to the operating result as a whole, as well as to the specific revenue from a product or service.
Companies whose goal is to make a profit will not want to break even for too long. For a company that was making a loss until recently, breaking even will be good news. For companies that were previously making a profit, the break-even point will be a time to rethink what profit strategy to pursue.
Profitability threshold
Operating profit depends on several factors. One of the most important is the amount of products sold. An organization's expenses consist of both fixed costs (overhead, housing, etc.) and variable costs (raw materials, purchasing). A company's sales will have to be of a certain magnitude to at least cover all costs. This is also referred to as the critical point.
