Question

Which of the following is NOT a correct statement regarding break-even?

A. Accounting break-even is the sales level that results in zero project net income.
B. The cash break-even is the sales level that results in zero OCF.
C. The financial break-even is the sales level that results in zero NPV.
D. If there is depreciation the cash break-even will exceed the accounting break-even Of the three break-evens, the financial break-even point is typically the highest.

Answer 1

D. If there is depreciation the cash break-even will exceed the accounting break-even Of the three break-evens, the financial break-even point is typically the highest.

This statement is not true because although depreciation increases the cash and decreases income, there are many other factors too, for eg if the accounts receivables are higher than the depreciation costs, then the cash break even will not exceed the accounting break even.

Step-by-step explanation: