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Financial leverage breakeven occurs when return on total assets is equal to the cost of borrowed funds. True False

User Nukeforum
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Final answer:

Financial leverage breakeven occurs when the return on total assets is equal to the cost of borrowed funds. True.

Step-by-step explanation:

Financial leverage breakeven occurs when the return on total assets is equal to the cost of borrowed funds. In other words, it is the point at which a company is neither making a profit nor a loss.

For example, let's say a company has borrowed $10,000 at an annual interest rate of 5%. If the company's return on total assets is also 5%, then it has achieved financial leverage breakeven because the return on its assets is equal to the cost of borrowing.

So, the statement is True.

User Kon
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