A firm's ________ is the level of sales necessary to cover all operating costs, i.e., the point at which EBIT equals zero.
A) cash breakeven point
B) financial breakeven point
C) operating breakeven point
D) total breakeven point

Question

Quizplus · Accepted Answer

The operating breakeven point is the level of sales at which a firm's EBIT will be zero, meaning that it has just covered all of its operating costs. The cash breakeven point relates to the amount of cash required to cover a firm's expenses, while the financial breakeven point takes into account the cost of capital. The total breakeven point is a generic term not commonly used in finance.

A Firm's ________ Is the Level of Sales Necessary to Cover