Final answer:
Financial leverage breakeven does not occur when return on total assets equals the cost of borrowed funds; it occurs when EBIT is equal to interest expenses. Thus, the statement is false.
Step-by-step explanation:
Financial leverage breakeven occurs when the earnings before interest and taxes (EBIT) is equal to the total interest expenses. At this point, a company earns just enough income to cover its interest expenses, with no earnings available for shareholders or further growth. Therefore, the statement that financial leverage breakeven occurs when return on total assets is equal to the cost of borrowed funds is false. Financial leverage is about how a firm's earnings can be affected by the use of debt, and the breakeven point specifically refers to the level of EBIT where those earnings are just enough to cover interest expenses on debt.