Break-Even Point

In finance, the term break-even point denotes a threshold above which an enterprise becomes profitable.

Most enterprises require some amount of investment to undertake. The investment represents the cost of the enterprise. When an enterprise generates enough money to cover the entire amount invested in it, it has reached its break-even point. Income generated after an enterprise has reached its break-even point is profit.

A business reaches its break-even point at the time when it first earns enough revenue to cover its expenses. An investment reaches its break-even point when returns match invested capital. A product reaches its break-even point when revenues generated by the product match total investments in the development and marketing of the product.

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