Break Even

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  • Created by: Bethany
  • Created on: 09-05-15 17:57

Break Even-

Break-even is a point in a business venture when the profits are equal to the costs.

Benefits-

  • Relatively simple concept and the formula can be understood and used by most entrpreneurs
  • The information provided can be vital when taking a decision whether to go ahead by most entrepreneurs
  • It is widely used to support applications from entrepreneurs for loans
  • It can be quickly adapted to allow for many 'what if' situtations to be considered and compared. This reinforces the usefulness of the technique for decision-making.

Drawbacks-

  • It assumes that all output produced is sold.
  • It oversimplifies business situations
  • Many firms sell more

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