The glossary to understand and take action

Break-even point

The break-even point is the level of activity at which revenue covers the costs included in the calculation model.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

It depends on the distinction between fixed and variable costs and on margin assumptions. Reaching it does not guarantee sufficient cash flow: collection periods and investments must also be financed.

In your file

What this changes in practice

The break-even point estimates the level of activity needed to cover the costs included in the model. It depends on the distinction between fixed and variable costs and on margin assumptions. It does not mean that cash flow is sufficient: investments, payment terms and repayments may create a financing need. A simulation must state its period and test several levels of activity.

A scenario to help you understand

Educational example

A business calculates the revenue required to cover its costs, then separately prepares the timetable for receipts and expenses.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Justifier les hypothèses de marge
  • Séparer charges fixes et variables
  • Tester un scénario moins favorable

The practical question

Find out more

Quel calcul simple aide à comprendre le seuil de rentabilité ?

Dans un exemple fictif, une activité supporte 30 000 euros de charges fixes et une marge sur coûts variables de 50 % du chiffre d’affaires. Le seuil du modèle est 60 000 euros. Ce calcul illustratif suppose des coûts et une marge stables ; il ne couvre pas à lui seul les décalages de trésorerie ni les besoins d’investissement.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

Contribution marginDifference between sales and costs that vary with the level of activity, under the management model used.Financial forecastThe financial forecast translates the project's assumptions into expected results, cash flows and financing needs.Working capital requirement (WCR)The working capital requirement (WCR) measures the financing absorbed by the operating cycle, notably inventory and receivables, less operating liabilities.Business planThe business plan presents the project, its market, its organisation and its financial forecasts.EquityEquity consists of accounting resources including, in particular, capital, reserves and results according to the applicable format.Accounting closeThe accounting close encompasses the work that finalises the accounts for a financial year and makes it possible to prepare the financial statements.

Put it into practice

Explore further with our guides

Practical guideBusiness cash flow: anticipating pressures and deciding in timePractical guideBusiness plan in Luxembourg: building verifiable assumptionsPractical guideBreak-even point: build a calculation and test assumptions

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.