The accounting operating profit break-even points are smaller than the corresponding pretax operating cash flow break-even points for a project with positive costs.

Question

Quizplus · Accepted Answer

The accounting operating profit break-even point typically includes both fixed and variable costs, while the pretax operating cash flow break-even point primarily focuses on covering variable costs and the cash fixed costs, excluding non-cash expenses like depreciation. Therefore, the cash flow break-even point can be reached before the accounting profit break-even point, especially in projects with significant non-cash expenses.

The Accounting Operating Profit Break-Even Points Are Smaller Than the Corresponding