Question

When a business owner is asked how the business is doing and she replies,

"We are breaking even" what does this actually mean?

Answer 1

That we are no profit and loss position.

Step-by-step explanation:

Breakeven point is the point at which the company is at no profit no loss position. If the lady is saying that we are breaking even, its one explanation is that all that we have earned has covered all of our costs. The second explanation is dependant on the fixed cost considered. If the fixed cost considered is for whole of the year and we are breaking even at the 8th month then the contribution in the next four months would be 100% profit.