BREAKEVEN Meaning and
Definition
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Breakeven is a financial term used to describe the point at which total revenue matches total expenses, resulting in neither profit nor loss. It is the stage in which a business, project, or investment recoups its initial costs. At breakeven, the income earned is just sufficient to cover all the necessary expenditures without generating additional profits.
To calculate the breakeven point, revenue and costs are evaluated. Revenue represents the money generated from the sale of goods or services, while costs encompass all expenses associated with producing those goods or services. The breakeven analysis assists in determining the volume of sales required to cover fixed costs, such as rent, utilities, and salaries, as well as variable costs like materials, labor, and taxes.
Once the breakeven point is achieved, any increase in sales or revenue will contribute to profit generation. Conversely, a decrease in sales below the breakeven point will result in losses. Breakeven analysis aids businesses in gauging the financial feasibility of their ventures, setting sales goals, pricing strategies, and budgeting.
Furthermore, breakeven can also refer to the breakeven point in pricing. It is the price at which the cost of producing an item is equal to the price at which it is sold. Setting a breakeven price allows businesses to ensure that they do not operate at a loss and cover their expenses while providing a product or service to consumers.
Common Misspellings for BREAKEVEN
Etymology of BREAKEVEN
The word "breakeven" is composed of two parts: "break" and "even".
- "Break" is derived from the Old English word "brecan", which means "to rupture" or "to shatter". In the context of breakeven, it signifies a point where costs or losses no longer exceed income or gains, essentially "breaking" the balance between the two.
- "Even" comes from the Old English word "efen", which means "equal" or "level". It refers to a state of equilibrium or balance, both in terms of costs and income.
Therefore, when combined, "breakeven" conceptually means reaching a point where income equals expenses or where the profit is equal to zero, neither making a profit nor incurring a loss.
Similar spelling words for BREAKEVEN
- break even,
- brake pads,
- broken,
- breakup,
- brake band,
- Brakefield,
- break open,
- breaking,
- breakfield,
- Brakebill,
- break down,
- breakdown,
- brake pedal,
- breakable,
- break in.
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