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Operating Expenses
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Break Even Point =
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Gross Profit / Net Earnings
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Explanation of Break Even Point:
The Break Even Point is a dollar figure calculated that represents the
level of sales required for a company to meet its operating expenses, thereby
breaking even.
Importance of Break Even Point:
A decreasing Break Even Point is generally a positive sign,
showing that the company will have an easier time reaching the point at
which it breaks even during the course of its operations. Additionally,
this value is useful in trying "what-if" scenarios, by re-running the
calculation with estimated values in place of reported values to see how
sensitive the Break Even Point reacts to these number changes.
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