break even

B

break even

Meaning

• to neither gain nor lose money in a deal or business.
• when total earnings exactly match total expenditures, the situation is balanced.
• to reach a state where no financial gain or loss is experienced.
• to reach a point where revenues equal expenses.
• to have an equal amount of income and expenses.
• to earn as much money as was spent.
• to generate enough revenue to offset all expenses.

Various forms of the idiom “break even,” often abbreviated as B/E in finance, describe a financial balance where income equals expenses. “Break even” as a verb refers to the action of reaching this financial equilibrium, commonly seen in business reports and casual conversations about finances. The adjective “break-even” describes points or conditions where revenues match expenses, often found in financial statements and business analyses. Investment discussions and performance reviews frequently use the noun form “break-even” to denote the specific point of financial balance. In informal contexts or specific industries, people occasionally use the less common variant, “breakeven,” interchangeably.

Example Sentences

1. Despite our best efforts, the restaurant only managed to break even last month.
2. We need to determine our break-even point before launching the new product.
3. The break-even analysis revealed that we need to increase our sales volume.
4. Reaching break-even is crucial for our startup’s sustainability.
5. The team celebrated when they hit the break-even mark for the first time.
6. The breakeven calculation showed that our costs are still too high.
7. Understanding the breakeven point for each product line aids in strategic planning.

Origin and History

The idiom “break even” has its roots in financial and business terminology, reflecting the fundamental concept of achieving a balance between income and expenses. The phrase emerged in the early 20th century, a period marked by significant advancements in economic theory and financial practices. During this time, the growth of commerce and industry necessitated more precise ways to measure and describe financial performance.

The term “break” in this context implies stopping or coming to a halt, while “even” suggests a state of balance or equality. When combined, “break even” effectively conveys the concept of achieving a balance between financial outflows and inflows, leading to no net profit or loss. This idiom gained traction in the business community as it provided a clear, concise way to discuss a crucial aspect of financial health and viability.

Karl Bücher and Johann Friedrich Schär, influential economists of the late 19th and early 20th centuries, contributed to the development of break-even analysis. Bücher’s studies on economic history provided a contextual understanding of trade and market evolution, while Schär’s focus on cost structures and the cost-volume-profit relationship directly influenced the creation of break-even analysis. Their work established the fundamental concepts of fixed and variable costs, as well as the graphical representation of break-even points. Today, break-even analysis is a crucial tool for businesses, helping them assess financial health, plan production levels, and make informed decisions.

Business, Money