Which of the following statements concerning the financial breakeven point, EBITFinBEP, is correct?
A)The financial breakeven point determines the impact of a firm's financing mix on its earnings per share (EPS).
B)The financial breakeven point determines the level of sales a new product must achieve to be profitable.
C)The financial breakeven point determines the effects of a general expansion in the level of a firm's operations.
D)The financial breakeven point analyzes the consequences of purchasing modernization projects that require increase investments in fixed assets.
E)The financial breakeven point represents the level of production and sales at which net operating income equals zero.

Question

Quizplus · Accepted Answer

The financial breakeven point refers to the level of earnings before interest and taxes (EBIT) that a company must achieve to cover all of its financial expenses, thus having no impact on its earnings per share (EPS). It does not directly relate to sales levels, expansion, modernization projects, or the point where net operating income equals zero.

Which of the Following Statements Concerning the Financial Breakeven Point