When does a project breaks even?Is it when it starts earning profit or when the project cost is recovered?

Answer 1

There are three elements in your question and these are:

1) What is break even

2) Recovery of Project Cost

3) Profit earning

In fact you must understand all the three separately

BREAK EVEN - means where earning and expenses are equal which does not include depreciation

RECOVERY OF PROJECT COST - Project cost can be recovered by charging Depreciation every year or by creating a reserve for it. It cannot be charges against your earning as it is an asset.

PROFIT EARNING - There are two types of profit - 1) Cash Profit and 2) Book Profit. Cash Profit is where there are no cash loses and there is a loss after charging of depreciation whereas book profit is that profit where books shows profit after charging of depreciation and all provisions related to that particular accounting year.

Answer 2

Project cost recovery and profit-earning happen at the same point, which is commonly called the project break-even point, because if you stopped right then, you'd be even (no loss, no profit).

Answer 3

When the cost is recovered then it will earn profits.

Answer 4

A break even point is when the total costs of the projects are recovered ie you don't lose, you don't win

Answer 5

When the cost is recovered, and there is no profit no loss for the next few months. eventually you should make profits.

Answer 6

project to break even is when all expenses are recovered and you then start making profit

Answer 7

first you care about the word BREAK EVEN "even" denotes EQUAL here. meaning that when you reach to a point in busines when you are neither in loss nor in profit but has recoverd your investment and going to enter in profit at this point you are suppose to break the even level to enter into profit. i think you have got reply. to understand the exact meaning of ne such word separate them for example TURN-KEY.