The commonly used business term "break even" refers to the point where the total revenue earned is equal to the total expenses incurred, resulting in neither profit nor loss. Phonetically, "break even" can be transcribed as /breɪk ˈiːvən/. The first syllable "breɪk" is pronounced like the word "bake" with an "r" sound, while the second syllable "ˈiːvən" is pronounced with a long "e" sound followed by the "v" sound and a neutral vowel. The phonetic transcription helps to clarify the correct pronunciation of the word.
Break Even:
Break even refers to the point at which a business or venture neither makes a profit nor incurs a loss. It is the level of activity or sales at which total revenue equals total costs. In other words, it is the moment when a company's total expenses equal the revenue it generates from sales, resulting in zero profit or loss.
At the break-even point, the business covers all its fixed costs, such as rent, salaries, and utilities, and meets its variable costs, including raw materials and direct labor. The concept of break even is essential to assess the financial viability and sustainability of a business. It helps determine the volume of output or sales required for a company to cover all its operating expenses.
Break even can be calculated by dividing the total fixed costs by the difference between the selling price per unit and the variable cost per unit. The break-even analysis allows companies to understand the minimum level of sales they need to achieve in order to cover expenses and avoid losses. This information is vital for budgeting, pricing decisions, cost controls, and determining the financial feasibility of new projects or investments.
In conclusion, break even signifies the point at which total revenue equals total costs, resulting in zero profit or loss. It is a significant milestone for businesses as it helps them determine the minimum sales level required to cover all expenses and achieve financial stability.
The term "break even" has its roots in accounting and business.
The word "break" in this context means to stop, halt, or interrupt. It is derived from the Old English word "brecan", which means to break or burst. In the business sense, it refers to reaching a point where costs and expenses are equal to or exactly balanced with revenue or income.
The word "even" comes from the Old English word "efen", which means level or equal. It signifies a point of equality or equilibrium.
Therefore, when "break" and "even" are combined, the term "break even" suggests a situation where income or revenue is equal to expenses or costs, resulting in no profit or loss.