What does Break-Even Point mean?
The Break-even point is defined as the level of revenue or earning that fully covers the level of costs. In this point no revenues are generated but the cots are covered which means no lose no win for business is gathered. If the level of breakeven point is higher than the risk of investment will also be higher. The shareholders perspective is understood in terms of breakeven point as the investment projects may exceed its break even point and gather revenues. The financial and the accounting break even points both are needed to be addressed in order to make sure the decision taken by investors is fully covered. The two break even points may represent different perspectives on how much and how higher the margin of revenue is from the level of costs.