break-even


Also found in: Dictionary, Thesaurus, Encyclopedia, Wikipedia.
Related to break-even: Break-even analysis

Break Even

1. To make the sales or revenues necessary to cover costs and prevent a firm from operating at a loss. The breakeven may be relatively stable or it may fluctuate, depending on the company or industry. Companies with high breakevens tend to have large fluctuations in earnings from year to year.

2. To sell a security at a price that causes the seller to neither make a profit nor lose money on the sale.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
Break-evenclick for a larger image
Fig. 11 Break-even. A supplier's typical short-run costs and revenues. Fixed costs do not vary with output and so are shown as the horizontal line FC. Total cost comprises both fixed costs and total variable costs and is shown by line TC. Total revenue rises as output and sales are expanded and is depicted by line TR. At low levels of output such as Q total costs exceed total revenues and the supplier makes a loss equal to AB. At high levels of output such as Q2 revenues exceed costs and the supplier makes a profit equal to DE. At output Q1 total revenues exactly match total costs (at C) and the supplier breaks even.

break-even

the short-run rate of output and sales at which a supplier generates just enough revenue to cover his fixed and variable costs, earning neither a PROFIT nor a LOSS. If the selling price of a product exceeds its unit VARIABLE COST then each unit of product sold will earn a CONTRIBUTION towards FIXED COSTS and profits. Once sufficient units are being sold so that their total contributions cover the supplier's fixed costs then the company breaks even. If less than the break-even sales volume is achieved then total contributions will not meet fixed costs and the supplier will make a loss. If the sales volume achieved exceeds the break-even volume, total contributions will cover the fixed costs and leave a surplus which constitutes profit. See Fig. 11.

Differences in cost structures can have a significant effect upon companies' break-even points. For example, a company with low levels of automation and so little capital equipment (for example Rolls Royce cars) would have low fixed depreciation costs but high direct labour costs. With high unit direct costs relative to selling prices such a firm would have a low unit contribution but low fixed costs, so would break even at a low sales volume, though profits would climb only slowly beyond the break-even point because of low unit contribution. By contrast, a highly automated plant would have high fixed depreciation costs, but with low unit direct labour costs, would have a higher unit contribution. Firms with such plants (for example Ford) would not break even until a much higher sales volume was achieved, but thereafter profits would increase rapidly with larger unit contributions. See MARGINAL COSTING, PROFIT-VOLUME CHART.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
Break-evenclick for a larger image
Fig. 17 Break-even. A supplier's typical short-run costs and revenues. Fixed costs do not vary with output and so are shown as the horizontal line FC. Total cost comprises both fixed costs and total variable costs and is shown by line TC. Total revenue rises as output and sales are expanded and is depicted by line TR. At low levels of output like Q, total costs exceed total revenues and the supplier makes a loss equal to AB. At high levels of output like Q2 revenues exceed costs and the supplier makes a profit equal to DE. At output Q1 total revenues exactly match total costs (at C) and the supplier breaks even.

break-even

the short-run rate of output and sales at which a supplier generates just enough revenue to cover his fixed and variable costs, earning neither a PROFIT nor a LOSS. If the selling price of a product exceeds its unit VARIABLE COST, then each unit of product sold will earn a CONTRIBUTION towards FIXED COSTS and profits. Once sufficient units are being sold so that their total contributions cover the supplier's fixed costs, then the company breaks even. If less than the break-even sales volume is achieved, then total contributions will not meet fixed costs and the supplier will make a loss. If the sales volume achieved exceeds the breakeven volume, total contributions will cover the fixed costs and leave a surplus that constitutes profit.
Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
Mentioned in ?
References in periodicals archive ?
The OC of 11.8%, which Fitch relies upon in its analysis, provides more protection than the break-even OC of 6.5% for a 'AAA' rating.
Fitch Affirms Danske Bank AS Mortgage Cover Pool D Covered Bonds at 'AAA'
The two methods to calculate the break-even point are the equation method and contribution method.
Cost Factors and Analysis in Estimating: Creating a cost estimate model ranks among the most important steps in business planning and budgeting, and it starts with knowing the detailed factors and costs that go into producing a casting
Based on our detailed macroeconomic framework for the GCC countries, we expect fiscal break-even oil prices to decline further in the coming years," said Garbis Iradian, chief economist for the Middle East & North Africa at the Institute of International Finance (IIF).
Falling fiscal break-even oil prices bring relief to GCC
However, UEFA defended its FFP regulations by saying that it completely rejects the suggestion that the break-even requirement may lead to any restriction of competition in the market for matches played in UEFA club tournaments.
'Revolutionary' Belgian lawyer setting sight to change UEFA's FFP rules
Llistosella said, 'We want to see the operating break-even of this unit by calendar year 2016.
Daimler India Commercial Vehicles to achieve break-even within next two years
"As a result, a number of economies (including) Algeria, Bahrain, Iran, Iraq, Libya, Yemen, have fiscal break-even prices above the projected oil price for 2014," it added.
IMF warns on oil price shock for Mena
A group of other clubs, including Wigan and Chelsea, are also in favour of a break-even system but argue that wealthy benefactors should be permitted to put extra investment into clubs.
Prem chiefs: Clubs must break even
Since inception, Insurance House has recorded exceptional results, starting with its successful first post-crisis IPO in the UAE back in Q1 2011, and achieving operating break-even in less than 12 months, as opposed to the projected break-even by the end of the second full year of operations according to the IPO Prospectus.
Insurance House posts nine month profit of AED 7.65 million
Opec's weighted average fiscal break-even price fluctuates within a relatively narrow range of $90 to $110 a barrel, the bank said.
Iran needs oil at $127 to balance budget, more than Saudi Arabia
TELECOMWORLDWIRE-October 14, 2011-Sony Ericsson reports break-even for Q3 and decides to focus on smartphones(C)1994-2011 M2 COMMUNICATIONS http://www.m2.com
Sony Ericsson reports break-even for Q3 and decides to focus on smartphones
M2 EQUITYBITES-October 14, 2011-Sony Ericsson reports break-even for Q3 and decides to focus on smartphones(C)2011 M2 COMMUNICATIONS http://www.m2.com
Sony Ericsson reports break-even for Q3 and decides to focus on smartphones
Furthermore, its goal for break-even in 2012 is seen as difficult to achieve.
-Credit Agricole sees Greek debt exposure at EUR850m

Financial browser ?
Full browser ?