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Break even point in business

Breakeven point. What is this?

Definition 1: Breakeven point is a situation where by a business is neither making profit nor making any loss. It is a scenario where the business is at cross road. It can either move on based on the expected prosperity or close down if future operations are not promising.

Definition 2: Breakeven point is a point at which the total revenue is equal to total cost. In other words, it is a point whereby profit is zero (ie Total Revenue-Total Cost=zero)

Definition 3: Breakeven point is a case whereby sales minus cost of sales is zero. No profit at all.

Breakeven point analysis is presented in twofold;

  1. Graphical Approach
  2. Mathematical Approach

Under the Graphical approach,the below topics will be covered

Under the Mathematical approach,the below topics will be covered

About the Author - Dr Geoffrey Mbuva(PhD-Finance) is a lecturer of Finance and Accountancy at Kenyatta University, Kenya. He is an enthusiast of teaching and making accounting & research tutorials for his readers.