Establishes the minimum revenue a company must reach to cover its financial obligations or expenses.
The Break-Even analysis is a critical component of the daily management of a business. Essentially, it establishes the minimum revenue a company must reach to cover its financial obligations or expenses.
The Break-Even Point is also referred to as the “Zero-Profit Point”. It is very versatile and can be used to support many managerial decisions.
Without the Break-Even amount for example, the marketing department wouldn’t be able to determine effectively, the minimum sales goal that a company must reach in order to remain operational.