Break-even Analysis

Front

What is break-even analysis?

Back

A method used in business to determine the exact point at which the business’ income equals the business’ expense.

Front

What is income in a business context?

Back

Money that comes into the business, usually from sales or services rendered.

Front

What are expenses?

Back

Money that is spent on producing the product or rendering the service, as well as operational costs for the business.

Front

What are fixed expenses?

Back

Expenses that stay the same every month.

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What are variable expenses?

Back

Expenses that change every month.

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What is profit?

Back

The surplus/extra money that is left after all the expenses have been covered.

Front

What is the formula for profit?

Back

Profit = Income - Expenses.

Front

What is a loss in business terms?

Back

When there is not enough money to cover all the expenses.

Front

What is the formula for loss?

Back

Loss = Expenses - Income.

Front

What does break-even mean?

Back

The point at which the income equals the expenses, meaning the business is not making a profit nor a loss.