The Financial Break-Even Identifies the Minimum Level of Sales Quantity

question 238

Multiple Choice

The financial break-even identifies the minimum level of sales quantity required to:

• A) Accept a project based on the net present value.
• B) Accept a project based on the accounting rate of return.
• C) Have cash inflows equal cash outflows.
• D) Have a positive internal rate of return.
• E) Cause the operating cash flow to equal zero.

---

Definitions:

Operating Cycle

The duration of time it takes for a company to purchase inventory, sell it to customers, and collect the cash from the sale.

Cash Cycle

The period between the outlay of cash for the purchase of inventory and the receipt of cash from accounts receivable, reflecting how quickly a company can convert its products into cash through sales.

Restrictive Financial Policies

Policies put in place to limit certain actions by the firm, often to maintain financial stability or to comply with regulatory requirements.

Current Asset Management

The practice of overseeing and optimizing the handling of a company's short-term assets, such as cash, inventory, and receivables.