Finance:point at which revenues equal costs. The point is located by break-even analysis, which determines the volume of sales at which fixed and variable costs will be covered. All sales over the break-even point produce profits; any drop in sales below that point will produce losses.
Real estate:occupancy level needed to pay for operating expenses and debt service, but leaving no cash flow. See also cash flow; operating expense.
Securities:dollar price at which a transaction produces neither a gain nor a loss.
the amount of rent or the occupancy level needed to pay operating expenses and debt service. Also called default point.
Example: Annual operating expenses for a 100-unit apartment complex are estimated at $600,000 per year. Debt service requirements are $750,000 per year. Therefore, total cash requirements are $1,350,000. If all apartments are rented all year, the gross income would be $1,800,000. The break-even point is at 75% occupancy. At that level, gross income would exactly equal cash requirements.
