Breakeven Point Calculation 
Articles  Books  Dictionary  Faq  Home  Leaders  Organizations  Search

Breakeven Point Analysis 
Summary of Breakeven Point Calculation. Abstract 
In breakeven point calculation, the breakeven point is, in general, the point at which gains equal losses. The point where sales or revenues equal expenses. Or also the point where total costs equal total revenues. There is no profit made or loss incurred at the breakeven point. This is important for anyone that manages a business since the breakeven point is the lower limit of profit when setting prices and determining margins.
Breaking even today does not return the losses occurred in the past, or build up a reserve for future losses, or provide a return on your investment (the reward for exposure to risk).
The Breakeven method can be applied to a product, an investment, or the entire company's operations and is also used in the options world. In options, the breakeven point is the market price that a stock must reach for option buyers to avoid a loss if they exercise. For a call, it is the strike price plus the premium paid. For a put, it is the strike price minus the premium paid.
The BEP must not be mistaken for the payback period, the time it takes to recover an investment.
In Value Based Management terms, a breakeven point should be defined as the operating profit margin level at which the business / investment is earning exactly the minimum acceptable rate of return, that is, its total cost of capital.
Book: Marcell Schweitzer  BreakEven Analyses: Basic Model, Variants, Extensions
👀  TIP: On this website you can find much more about Breakeven Analysis! 
Compare with Breakeven Point Analysis: : CFROI  Economic Value Added  CostBenefit Analysis  Free Cash Flow  Net Present Value
About us  Advertise  Privacy  Support us  Terms of Service
©2023 Value Based Management.net  All names ^{tm} by their owners