Break-Even Analysis in Business

These flashcards cover key vocabulary and concepts related to break-even analysis in business, including definitions and impacts of revenue and costs.

Break-even point

The point where total revenue equals total costs, resulting in no profit or loss.

Increased revenue

Results from higher selling prices or selling more products, leading to higher profits and fewer sales needed to break even.

Decreased revenue

Caused by selling fewer products or lowering prices, making it harder to break even and potentially leading to losses.

Increased costs

Usually negative, as they require more sales to break even; can be absorbed by businesses or passed on to customers.

Decreased costs

Usually positive; they lower the break-even point and can lead to higher profits or lower prices for customers.

Fixed costs

Costs that do not change with the level of business activity; minimizing these is crucial to lowering the break-even point.

Variable costs

Costs that vary with the level of output; keeping them low is important for maintaining profitability.

Business feasibility

The practicality and viability of a business opportunity, assessed through break-even analysis.

Investor persuasion

Using break-even analysis to convince investors or banks to finance a business.

Impact of pricing changes

Adjustments in selling prices that affect revenue and thus influence the break-even point.