Optimizing Break-Even Point: A New Methodology for Identifying Critical Components and Managing Financial Stability

Break-even point is subject to certain limitations, which are chiefly associated with the stability of parameters. To this end, firms should not rely solely on static parameters but should measure the rate of change of the company's stability. This rate of change is the most effective indicator of future risk, as it allows financial managers to evaluate whether to finance projects or not, depending on the risk level. This paper focuses on the company's equilibrium point after accounting for potential risk factors such as economic, political and geographic influences. The results indicate that a one-unit change in fixed cost results in an inversely proportional change in the price with respectto quantity. In addition, if variable cost increases by one unit, the price will increase by an equivalent amount. Furthermore, a one-unit decrease in quan-tity will result in a price hike that is equivalent to the fixed cost divided by the square of the quantity. Finally, a new equation is proposed to show how the price changes in response to a simultaneous change in all components