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Break-even Point

Break-even is the crucial stage in the initial trading activities of the company that marks the moment when the company stops making losses and starts making profits.

Break-even analysis is based on the information available in the income statements and cash flows. All businesses should perform this analysis without exceptions. A break-even analysis shows the volume of revenue from sales that are needed to balance the fixed and variable expenses. Break-even point identifies the point where total revenue is just sufficient to cover total cost.

In accounting, the break-even point (BEP) is the point at which cost or expenses are equal to revenue: there is no net loss or gain, and one has "broken even".

Before breaking even the company losses money on its operating activities as expenses are greater than revenue from sales. As the company trades selling licenses each license sold makes a "contribution" towards "absorbing" 

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