The firm's ________ is the level of sales necessary to cover all operating costs, i.e., the point at which EBIT = $0.
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 company's operating income, also known as EBIT, is zero. This means that the company has covered all of its operating costs and any additional sales revenue will contribute to generating profits. The cash breakeven point refers to the level of sales necessary to cover all cash expenses and is unrelated to EBIT, while the financial breakeven point and total breakeven point include considerations of interest expense and non-operating costs, respectively.

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