Question

16. The _______________ break-even point is the one that results in a ___________________ of zero. a. Financial; net present value b. Accounting; net present value c. Cash; net income d. Accounting; operating cash flow e. Cash; net present value

17. If my forecasted numbers may be off by + or - 10%, what method of analysis would work best? a. Simulation b. Sensitivity c. Scenario d. Break-even e. Degree of operating leverage

Answer 1

Question 16 : Option A is the correct answer "Financial; net present value"

Financil break even is used ot measure the point where the earning brefore interest and tax (EBIT) results in earning per share to the shareholders equal to the Zero. It is a point where the company ahs zero Net present value and they are at point of no profit and no loss.

Question 17: Senstivity

Senstivity analysis is used to meausre the Change in the differenet variables that will occur due to the change in the input variables. It helps to determine the overall change in the earnings and overall cost due to the range of variable.