The Break - Even Point and the Leverage Effect – Instruments for Assessing the Economic and Financial Risk

Abstract: The establishing by any company, depending on the domain of activity, of an minimum objective to be attained, so that the business should become profitable, is the aim principle of this article. In order to attain this goal, the assumed risk is considered, which implies the use of certain assessing instruments, as the break-even point and the leverage effect. This approach stands for a significant step in making strategic decisions, being a way to evaluating company security in case in which market conditions become unfavourable