Break Even/Margin of Safety. Flashcards
1
Q
What is Break Even?
A
When a businesses profits are equal to the costs.
2
Q
How do you calculate Break-Even?
A
(Revenue - Break-Even Point) x Sales Price
3
Q
What is Margin of Safety?
A
The amount sales can fall before the break-even point is reached and the business makes no profit.
4
Q
How do you calculate Margin of Safety?
A
Actual Budgeted Sales - Break-Even Sales
