BE

Break-Even

Short definition

Break-even is the volume or sales at which contribution exactly covers fixed cost. It is the EBIT-zero operating point; cash break-even still needs interest, principal and maintenance cash.

Detailed explanation

Accounting break-even treats depreciation as fixed; cash break-even takes depreciation out and adds debt service and cash tax. The two points diverge in capital-intensive, indebted firms.

Mix, discounts and a capacity ceiling break the single-product formula. Multi-product break-even needs a weighted contribution or a mix scenario. IFRS 16 rental cash is put back into cash break-even.

Why it matters for the CFO

If a capacity build or a price move pushes break-even volume outside the demand band, DOL is a tail scenario.

How it is calculated

Başabaş hacim = Sabit maliyet / Birim katkı; başabaş ciro = Sabit / katkı oranı

Fixed / unit contribution gives units. For cash break-even, rewrite fixed as cash-fixed + debt service − non-cash expense.

Variables in the formula

• Q_BE: break-even units
• CM_u: unit contribution

How to read it

Actual volume minus break-even is the margin of safety. If cash break-even sits inside the loan tenor, you may not need a refinance story; otherwise read it with the maturity wall.

Numerical example

Fixed 12 mn TL, unit contribution 30 TL → break-even = 400,000 units. Actual 500,000 → margin of safety 100,000 units (20%).

Definitions are educational. They are not investment, credit or tax advice.