Prepared by : ahmad hamid karasul

Date : 12/4/2021
What is a break even point

A break even point is used in multiple areas of business and finance. In accounting
terms, it refers to the production level at which total production revenue equals
total production costs. In investing, the break even point is the point at which the
original cost equals the market price. Meanwhile, the break even point in options
trading occurs when the market price of an underlying asset reaches the level in
which a buyer will not incur a loss.

How do you calculate a break even point?

Generally, to calculate the break even point in business, fixed costs are divided by
the gross profit margin. This produces a dollar figure that a company needs to
break even. When it comes to stocks, if a trader bought a stock at $200, and nine
months later it reached $200 again after falling from $250, it would have reached
the break even point.
Example