What operation is used in the profit calculation for break-even analysis?

In break-even analysis, the profit calculation is determined by subtracting total costs from total revenues. This operation is essential because the break-even point is where total revenue equals total costs, resulting in zero profit. Understanding this relationship allows businesses to identify the level of sales necessary to cover all expenses.

By using subtraction, one can directly see whether the revenues generated from sales are enough to cover fixed and variable costs, enabling a clear assessment of profitability. If revenues exceed costs, the business is making a profit, while if costs exceed revenues, the business is incurring a loss. This clarity is crucial for effective financial planning and decision-making.