Accounting break-even

Accounting break-even is the point where a company's total revenues exactly cover its fixed and variable expenses, resulting in neither profit nor loss. It indicates the minimum sales needed to keep the business operational without losing money. Beyond this point, the company starts making a profit; below it, losses occur. This metric helps businesses understand how much they need to sell to stay afloat and provides a clear target for financial planning. It’s calculated by dividing fixed costs by the contribution margin per unit (selling price minus variable costs).