At the break-even point, what is true about net profits?

At the break-even point, there is a critical relationship between revenue and costs. At this point, total revenue received from sales is exactly equal to the total costs incurred, which includes both fixed and variable costs. Therefore, when a company reaches its break-even point, it does not make a profit, nor does it incur a loss; its net profits are exactly zero.

This understanding is fundamental in accounting and financial management. The break-even point signifies the level of sales necessary to cover all expenses, and since net profit is calculated as total revenue minus total costs, the result at break-even is zero. Hence, the assertion that net profits at the break-even point are equal to zero is accurate and encapsulates the essence of break-even analysis in business operations.