FIN 480 COMPREHENSIVE LATEST QUESTIONS AND ANSWERS SURE A.pd

FIN 480 COMPREHENSIVE LATEST QUESTIONS AND
ANSWERS SURE A+
✔✔Cash break-even - ✔✔Sales level where operating cash flow (OCF) = 0

✔✔Financial break-even - ✔✔Sales level where net present value (NPV) = 0

✔✔Selling price - ✔✔How much each unit sells for

✔✔Variable cost - ✔✔Cost per unit

✔✔Fixed cost - ✔✔Costs that don't change with output

✔✔Depreciation - ✔✔Non-cash expense spreading cost of an asset over time

✔✔Sales - ✔✔Total revenue from units sold

✔✔Accounting break-even (inclusion) - ✔✔Includes depreciation (non-cash)

✔✔Accounting break-even (level) - ✔✔Higher break-even point

✔✔Cash break-even (inclusion) - ✔✔Ignores depreciation

✔✔Cash break-even (level) - ✔✔Lower break-even point

✔✔Operating Leverage - ✔✔Measures how sensitive operating cash flow is to changes
in sales

✔✔Higher fixed costs - ✔✔Higher operating leverage

✔✔Higher operating leverage - ✔✔Bigger impact of sales changes on cash flow

✔✔Degree of Operating Leverage (DOL) - ✔✔Shows how much operating cash flow will
change when sales change

✔✔High DOL - ✔✔Profits increase faster when sales rise; Losses increase faster when
sales fall

✔✔Low DOL - ✔✔More stable, less sensitive to sales changes

✔✔Current Assets (CA) - ✔✔Expected to turn into cash within a year

✔✔Current Liabilities (CL) - ✔✔Expected to require cash within a year