Finance Formulas / April 8, 2018 / Kenzie Kennedy
The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal. There is no net loss or gain, and one has "broken even," though opportunity costs have been paid and capital has received the risk-adjusted, expected return. In short, all costs that must be paid are paid, and there is neither profit nor loss. It is a type of a chart which is used for profit and loss and it is used in economics
Economic profit is the profitability measurement that calculates the amount that revenues received from selling a product exceeds opportunity costs incurred from using resources to make and sell these products. In other words, it’s the excess money a company earned from one course of action over another had they chosen differently.
Economic profit is the difference between the revenue a firm earns from sales and the firm’s total opportunity costs. It’s important to distinguish between accounting profit and economic profit. Accounting profit is total revenue minus the explicit costs of producing goods or services. Explicit costs are things like raw materials and employee wages. This is what most people are referring to when they talk about profit.
The cash flow statement (CFS) measures how well a company manages its cash position, meaning how well the company generates cash to pay its debt obligations and fund its operating expenses. The cash flow statement complements the balance sheet and income statement and is a mandatory part of a company's financial reports since 1987.
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