Financial Breakeven Point Represents the Level of Earnings Before Interest

question 153

True/False

Financial breakeven point represents the level of earnings before interest and taxes necessary for the firm to cover its fixed operating and financial changes that is, the point at which earnings per share (EPS) is equal to zero.

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Definitions:

Explicit Costs

The direct payment made to others in the course of running a business, such as wages, rent, and materials.

Implicit Costs

Implicit costs are the opportunity costs associated with a company's use of internal resources that could have been utilized elsewhere, not directly paid out in cash.

Economic Costs

The total cost of choosing one action over another, including both explicit costs (direct outlays) and implicit costs (opportunity costs).

Entrepreneur's Talent

The unique set of skills, knowledge, and intuition that an entrepreneur possesses, enabling them to identify, evaluate, and exploit business opportunities.