Break Even Point (BEP) is the level of EBIT at

Solution

When the Fixed Financial Expense = EBIT, resulting into zero Earnings available for equity shareholders, that level of EBIT is known as Financial Break Even Point. For Example,   Sales                                                 Rs.5000   Variable Costs                                  Rs.3500   Fixed Cost                                        Rs.1000   EBIT                                                  Rs.500   Interest cost                                      Rs.500    Profit                                                 Rs.0 (Break Even Point)