In a graphic breakeven analysis, the point where total revenue is less than total cost indicates the firm has ____.
A) net operating capital
B) cash flow from investing
C) a negative EBIT
D) a positive return on capital

Question

Quizplus · Accepted Answer

At the point where total revenue is less than total cost, the firm is experiencing a loss as its expenses are higher than its earnings. This means that the firm has a negative EBIT (earnings before interest and taxes) which is not enough to cover its operating costs. Therefore, choice C is the correct answer. Choices A and D are not relevant to the breakeven analysis, and choice B does not make sense in this context as cash flow from investing is not related to the firm's profitability.

In a Graphic Breakeven Analysis, the Point Where Total Revenue