Question

In order to conduct a cash break-even analysis, the analyst must add back depreciation from fixed costs. True False

Answer 1

The analyst does not need to add back depreciation from fixed costs for a cash break-even analysis.

Step-by-step explanation:

In order to conduct a cash break-even analysis, the analyst does not need to add back depreciation from fixed costs. This statement is False. Depreciation is a non-cash expense and should not be included in the cash break-even analysis. The cash break-even analysis focuses on determining the minimum level of sales needed to cover all cash expenses.