# How do you compute the break-even point and the target profit point?

On the following figure, you can see a visual representation of the two key metrics we will compute in the next pages: the break-even point (in volume, $$Q_{be}$$ and in revenues $$R_{be}$$) which is where the revenue line and the cost line intersect; and the volume ($$Q_{tp}$$) or revenue ($$R_{tp}$$) at target profit.

The break-even point is a first indication about operating risks associated with a cost structure: if it is very high, it means that the company will struggle achieving or maintaining a profit. As for the volumes and revenues at target profit, they are important benchmarks to continuously check whether the company progresses towards it goals.