Final answer:
The cash-flow break-even point is the sales volume at which cash flow equals zero. It represents the level of sales a business needs to cover all expenses and have zero net cash flow. To calculate it, consider fixed costs, variable costs, and the formula provided.
Step-by-step explanation:
The cash-flow break-even point is the sales volume (in dollars) at which the cash flow equals zero. It represents the level of sales a business needs to cover all its expenses and have zero net cash flow. At this point, the total revenue generated by the business is equal to its total costs, resulting in no profit or loss. To calculate the cash-flow break-even point, you need to consider the fixed costs and variable costs. Fixed costs are those expenses that do not change with the level of sales or production, such as rent or salaries. Variable costs, on the other hand, vary with the level of sales, such as the cost of raw materials or utilities. The formula to calculate the cash-flow break-even point is:
Cash-flow break-even point = Fixed costs / (Selling price per unit - Variable cost per unit)