a)
To prove: The relationship between operating cash flow and sales volume on the effect of taxes.
Introduction:
Operating cash flow refers to the cash flow of the firm by operating activities of the firm. It excludes non-cash expenses like depreciation and financing expenses like interest expense.
b)
To determine: The cash break-even point
Introduction:
Cash break-even point specifies a sales level, which can result in a zero operating cash flow. It takes place when a project’s
To determine: The accounting break-even point
Introduction:
Accounting break-even is a sales point at which there is no profit or loss. It is the most widely used measure of the break-even point.
To determine: The financial break-even point
Introduction:
Financial break-even point is a point that occurs at the time when a particular project breaks even on a financial basis. This means that the
c)
To prove: Algebraically, how the accounting break-even point is same as the cash break-even point.
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Fundamentals of Corporate Finance
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