Break-even (or break even), often abbreviated as B/E in finance, (sometimes called point of equilibrium) is the point of balance making neither a profit nor a loss. Any number below the break-even point constitutes a loss while any number above it shows a profit. The term originates in finance but the concept has been applied in other fields.
A simplified cash flow model shows the payback period as the time from the project completion to the breakeven.
In economics and business, specifically cost accounting, the break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even". A profit or loss has not been made, although opportunity costs have been "paid" and capital has received the risk-adjusted, expected return. In other words, it is the point at which the total revenue of a business exceeds its total costs, and the business begins to create wealth instead of consuming it.[1] It is shown graphically as the point where the total revenue and total cost curves meet. In the linear case the break-even point is equal to the fixed costs divided by the contribution margin per unit.
The break-even point is achieved when the generated profits match the total costs accumulated until the date of profit generation. Establishing the break-even point helps businesses in setting plans for the levels of production it needs to maintain to be profitable.[2]
In financeedit
The accounting method of calculating break-even point does not include cost of working capital. The financial method of calculating break-even, called value added break-even analysis, is used to assess the feasibility of a project. This method not only accounts for all costs, it also includes the opportunity costs of the capital required to develop a project.[3]
In other fieldsedit
In nuclear fusion research, the term break-even refers to a fusion energy gain factor equal to unity; this is also known as the Lawson criterion. The notion can also be found in more general phenomena, such as percolation. In energy, the break-even point is the point where usable energy gotten from a process equals the input energy.
In medicine, it is a postulated state when the advances of medicine permit every year an increase of one year or more of the life expectancy of the living, therefore leading to medical immortality,[4] barring accidental death.
In Association football, the break-even requirement was adopted by UEFA. It is known as UEFA Financial Fair Play Regulations. Its purpose is to prohibit clubs from spending more money on transfers than they earn as businesses, i.e. revenue per each fiscal year excluding donations from sponsors or advertisers.[5]
break, even, other, uses, disambiguation, break, even, often, abbreviated, finance, sometimes, called, point, equilibrium, point, balance, making, neither, profit, loss, number, below, break, even, point, constitutes, loss, while, number, above, shows, profit,. For other uses see Break even disambiguation Break even or break even often abbreviated as B E in finance sometimes called point of equilibrium is the point of balance making neither a profit nor a loss Any number below the break even point constitutes a loss while any number above it shows a profit The term originates in finance but the concept has been applied in other fields Contents 1 In economics 2 In finance 3 In other fields 4 ReferencesIn economics editMain article Break even economics nbsp A simplified cash flow model shows the payback period as the time from the project completion to the breakeven In economics and business specifically cost accounting the break even point BEP is the point at which cost or expenses and revenue are equal there is no net loss or gain and one has broken even A profit or loss has not been made although opportunity costs have been paid and capital has received the risk adjusted expected return In other words it is the point at which the total revenue of a business exceeds its total costs and the business begins to create wealth instead of consuming it 1 It is shown graphically as the point where the total revenue and total cost curves meet In the linear case the break even point is equal to the fixed costs divided by the contribution margin per unit The break even point is achieved when the generated profits match the total costs accumulated until the date of profit generation Establishing the break even point helps businesses in setting plans for the levels of production it needs to maintain to be profitable 2 In finance editThe accounting method of calculating break even point does not include cost of working capital The financial method of calculating break even called value added break even analysis is used to assess the feasibility of a project This method not only accounts for all costs it also includes the opportunity costs of the capital required to develop a project 3 In other fields editIn nuclear fusion research the term break even refers to a fusion energy gain factor equal to unity this is also known as the Lawson criterion The notion can also be found in more general phenomena such as percolation In energy the break even point is the point where usable energy gotten from a process equals the input energy In computer science the term used infrequently refers to a point in the life cycle of a programming language where the language can be used to code its own compiler or interpreter This is also called self hosting In medicine it is a postulated state when the advances of medicine permit every year an increase of one year or more of the life expectancy of the living therefore leading to medical immortality 4 barring accidental death In Association football the break even requirement was adopted by UEFA It is known as UEFA Financial Fair Play Regulations Its purpose is to prohibit clubs from spending more money on transfers than they earn as businesses i e revenue per each fiscal year excluding donations from sponsors or advertisers 5 References edit Levine David Michele Boldrin 2008 09 07 Against Intellectual Monopoly Cambridge University Press p 312 ISBN 978 0 521 87928 6 BBC GCSE Bitesize Breakeven point Retrieved 2015 09 08 Brealey R Myers S Marcus A Maynes E Mitra D 2009 Fundamentals of Corporate Finance McGraw Hill Ryerson USA pp 284 ISBN 978 0 07 098403 5 Kurzweil Ray Grossman Terry 2004 Fantastic Voyage Live Long Enough to Live For Ever Rodale Books ISBN 978 1579549541 Page 38 44 in PDF Retrieved from https en wikipedia org w index php title Break even amp oldid 1164930926, wikipedia, wiki, book, books, library,
