Financial modelling terms explained

Break-Even Analysis

A break-even analysis is a method of financial management that helps businesses in determining the level of sales volume at which total revenue will be equal to total costs.SEO meta description: A break-even point is the point at which revenue equals expenses.SEO meta description: A break-even analysis is a method of financial management that helps businesses in determining the level of sales volume at which total revenue will be equal to total costs.

What Is Break-Even Analysis?

Break-even analysis is a technique that is used to determine the point at which a company will start to make a profit, or "break even." The break-even point is determined by calculating the total fixed costs and the total variable costs of a company. Once these costs are known, the break-even point can be calculated by dividing the fixed costs by the contribution margin. The contribution margin is the difference between the selling price and the variable costs.

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