Definition of Break-even time

Break-even time

Related: Premium payback period.

Break

A rapid and sharp price decline.

Break-even analysis

An analysis of the level of sales at which a project would make zero profit.

Break-even lease payment

The lease payment at which a party to a prospective lease is indifferent between
entering and not entering into the lease arrangement.

Break-even payment rate

The prepayment rate of a MBS coupon that will produce the same CFY as that of
a predetermined benchmark MBS coupon. Used to identify for coupons higher than the benchmark coupon
the prepayment rate that will produce the same CFY as that of the benchmark coupon; and for coupons lower
than the benchmark coupon the lowest prepayment rate that will do so.

Break-even tax rate

The tax rate at which a party to a prospective transaction is indifferent between entering
into and not entering into the transaction.

Breakout

A rise in a security's price above a resistance level (commonly its previous high price) or drop
below a level of support (commonly the former lowest price.) A breakout is taken to signify a continuing
move in the same direction. Can be used by technical analysts as a buy or sell indicator.

Cash flow time-line

Line depicting the operating activities and cash flows for a firm over a particular period.

Cash-flow break-even point

The point below which the firm will need either to obtain additional financing
or to liquidate some of its assets to meet its fixed costs.

Evening up

Buying or selling to offset an existing market position.

Event risk

The risk that the ability of an issuer to make interest and principal payments will change because
of rare, discontinuous, and very large, unanticipated changes in the market environment such as (1) a natural
or industrial accident or some regulatory change or (2) a takeover or corporate restructuring.

Event study

A statistical study that examines how the release of information affects prices at a particular time.

Events of default

Contractually specified events that allow lenders to demand immediate repayment of a debt.

Group of seven (G7/G-7)

The G-5 countries plus Canada and Italy.

Industrial revenue bond (IRB)

Bond issued by local government agencies on behalf of corporations.

Just-in-time inventory systems

Systems that schedule materials/inventory to arrive exactly as they are
needed in the production process.

Market timer

A money manager who assumes he or she can forecast when the stock market will go up and down.

Real time

A real time stock or bond quote is one that states a security's most recent offer to sell or bid (buy).
A delayed quote shows the same bid and ask prices 15 minutes and sometimes 20 minutes after a trade takes place.

Revenue bond

A bond issued by a municipality to finance either a project or an enterprise where the issuer
pledges to the bondholders the revenues generated by the operating projects financed, for instance, hospital
revenue bonds and sewer revenue bonds.

Revenue fund

A fund accounting for all revenues from an enterprise financed by a municipal revenue bond.

Time decay

Related: theta.

Time deposit

Interest-bearing deposit at a savings institution that has a specific maturity.
Related: certificate of deposit.

Time draft

Demand for payment at a stated future date.

Time premium

Also called time value, the amount by which the option price exceeds its intrinsic value. The
value of an option beyond its current exercise value representing the optionholder's control until expiration,
the risk of the underlying asset, and the riskless return.

Time until expiration

The time remaining until a financial contract expires. Also called time to maturity.

Time to maturity

The time remaining until a financial contract expires. Also called time until expiration.

Time value of an option

The portion of an option's premium that is based on the amount of time remaining
until the expiration date of the option contract, and that the underlying components that determine the value of
the option may change during that time. time value is generally equal to the difference between the premium
and the intrinsic value. Related: in-the-money.

Time value of money

The idea that a dollar today is worth more than a dollar in the future, because the dollar
received today can earn interest up until the time the future dollar is received.

Time-weighted rate of return

Related: Geometric mean return.

Times-interest-earned ratio

Earnings before interest and tax, divided by interest payments.

Total revenue

Total sales and other revenue for the period shown. Known as "turnover" in the UK.

Turnaround time

time available or needed to effect a turnaround.

NET SALES (revenue)

The amount sold after customers’ returns, sales discounts, and other allowances are taken away from
gross sales. (Companies usually just show the net sales amount on their income statements, omitting returns, allowances, and the like.)

Breakeven point

The point at which total costs equal total revenue, i.e. where there is neither a profit nor a loss.

Revenue

Income earned from the sale of goods and services.

Revenue

Amounts earned by the company from the sale of merchandise or services; often used interchangeably with the term sales.

Unearned revenue

Money that has been paid by customers for work yet to be done or goods yet to be provided.

breakeven point

The annual sales volume level at which total contribution
margin equals total annual fixed expenses. The breakeven point is only a
point of reference, not the goal of a business, of course. It is computed by
dividing total fixed expenses by unit margin. The breakeven point is
quite useful in analyzing profit behavior and operating leverage. Also, it
gives manager a good point of reference for setting sales goals and
understanding the consequences of incurring fixed costs for a period.

revenue-driven expenses

Operating expenses that vary in proportion to
changes in total sales revenue (total dollars of sales). Examples are sales
commissions based on sales revenue, credit card discount expenses, and
rents and franchise fees based on sales revenue. These expenses are one
of the key variables in a profit model. Segregating these expenses from
other types of expenses that behave differently is essential for management
decision-making analysis. (These expenses are not disclosed separately
in externally reported income statements.)

times interest earned

A ratio that tests the ability of a business to make
interest payments on its debt, which is calculated by dividing annual
earnings before interest and income tax by the interest expense for the
year. There is no particular rule for this ratio, such as 3 or 4 times, but
obviously the ratio should be higher than 1.

Times Interest Earned Ratio

A measure of how well a company is able to meet its interest
payments based on the cash generated by its operations. It is
calculated by dividing the earnings before interest and taxes by the
total interest charges incurred by the firm.

break-even chart

a graph that depicts the relationships among revenues, variable costs, fixed costs, and profits (or losses)

break-even point (BEP)

the level of activity, in units or dollars, at which total revenues equal total costs

cycle time

the time between the placement of an order to
the time the goods arrive for usage or are produced by
the company; it is equal to value-added time plus nonvalue-
added time

employee time sheet

a source document that indicates, for each employee, what jobs were worked on during the day and for what amount of time

idle time

the amount of time spent in storing inventory or
waiting at a production operation for processing

incremental revenue

the revenue resulting from an additional contemplated sale

inspection time

the time taken to perform quality control activities

just-in-time (JIT)

a philosophy about when to do something;
the when is “as needed” and the something is a production,
purchasing, or delivery activity

just-in-time manufacturing system

a production system that attempts to acquire components and produce inventory only as needed, to minimize product defects, and to
reduce lead/setup times for acquisition and production

just-in-time training

a system that maps the skill sets employees
need and delivers the training they need just as they need it

lead time

see cycle time

prevention cost

a cost incurred to improve quality by preventing
defects from occurring

processing time

the actual time consumed performing the
functions necessary to manufacture a product

revenue center

a responsibility center for which a manager is accountable only for the generation of revenues and has no control over setting selling prices, or budgeting or incurring costs

service time

the actual time consumed performing the functions
necessary to provide a service

timeline

representation of the amounts and timing of all
cash inflows and outflows; it is used in analyzing cash flow
from a capital project

transfer time

the time consumed by moving products or
components from one place to another

Breakeven point

The sales level at which a company, division, or product line makes a
profit of exactly zero, and is computed by dividing all fixed costs by the average
gross margin percentage.

Just-in-time manufacturing

The term for several manufacturing innovations that
result in a “pull” method of production, in which each manufacturing workstation
creates just enough product for the immediate needs of the next workstation in the
production process.

Revenue

An inflow of cash, accounts receivable, or barter from a customer in exchange
for the provision of a service or product to that customer by a company.

Unearned revenue

A payment from a customer that cannot yet be recognized as earned
revenue, because the offsetting service or product for which the money was paid has
not yet been delivered.

break-even analysis

Analysis of the level of sales at which the company breaks even.

Time Deposit

See term deposit.

Internal Revenue Code

Refers to all federal tax laws as a group.

Internal Revenue Service

A federal agency empowered by Congress to interpret and enforce tax-related laws.

Overtime

A pay premium of 50 percent of the regular rate of pay that is earned
by employees on all hours worked beyond 40 hours in a standard work week

Timecard

A document or electronic record on which an employee records his or
her hours worked during a payroll period.

Time Clock

A device used to stamp an employee’s incoming or outgoing time
on either a paper document or an electronic record.

Fictitious Revenue

Revenue recognized on a nonexistent sale or service transaction.

Premature Revenue

Revenue recognized for a confirmed sale or service transaction in a period
prior to that called for by generally accepted accounting principles.

Realizable Revenue A revenue transaction where assets received in exchange for goods and

services are readily convertible into known amounts of cash or claims to cash.

Realized Revenue

A revenue transaction where goods and services are exchanged for cash or
claims to cash.

Revenue Recognition

The act of recording revenue in the financial statements. Revenue should
be recognized when it is earned and realized or realizable.

Sales Revenue Revenue recognized from the sales of products as opposed to the provision of

services.

Service Revenue

Revenue recognized from the provision of services as opposed to the sale of
products.

Just-in-time (JIT)

A cluster of manufacturing, design, and delivery practices designed to
continually reduce all types of waste, thereby improving production efficiency.

Break-Even

This is a term used to describe a point at which revenues equal costs.

Break-Even Analysis

An analytical technique for studying the relationships between fixed cost, variable cost, and profits. A breakeven chart graphically depicts the nature of breakeven analysis. The breakeven point represents the volume of sales at which total costs equal total revenues (that is, profits equal zero).

Deal Breaker

A deal breaker is a significant issue relating to the proposed financing between the prospective investor and the entrepreneur that needs to be resolved in order to close the deal.

Premium

1) Amount paid for a bond above the par value.
2) The price of an option contract; also, in futures
trading, the amount the futures price exceeds the price of the spot commodity. Related: inverted market premium payback period. Also called break-even time, the time it takes to recover the premium per share of a
convertible security.

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