The break-even point is the point at which total cost and total revenue are equal, meaning there is no loss or gain for a business
. It is an important calculation in a business plan presented to potential investors, as it helps them understand the return they can expect on their investment and the point at which they will realize this return
. For existing businesses, it can be a useful tool in analyzing costs, evaluating profits, and proving their potential turnaround after disaster scenarios
. Break-even analysis is the effort of comparing income from sales to the fixed costs of doing business, and it seeks to identify how much in sales will cover the costs of doing business
. The formula for break-even analysis is Break-Even Quantity = Fixed Costs / (Sales Price per Unit – Variable Cost Per Unit)
