What does it even mean if a business breaks even? To put it simply, the break-even point is when a business is generating enough revenue to cover all of its expenses, but not making a profit or a loss. In other words, the sales revenue equals the total costs of the business.

Understanding break-even analysis is essential for entrepreneurs to manage their finances effectively. By calculating the break-even point, entrepreneurs can forecast the minimum number of units they need to sell to cover all their costs. They can also identify the contribution per unit, which is the profit earned from each sale after accounting for all the variable costs.

By the end of this video, you'll have a solid grasp of the concept of break-even analysis and how it can be used to forecast a business's potential profits. So, let's dive in and learn how to calculate the break-even point, the contribution per unit, and the margin of safety.