What is the formula to calculate financial break-even?

The financial break-even point is a critical concept in corporate finance, as it determines the level of sales at which total revenues equal total costs, including operating cash flow. The formula for financial break-even accounts for fixed costs (FC), operating cash flow (OCF), the price per unit (P), and variable costs per unit (v).

The correct formula to calculate financial break-even is given by the second choice: Q = (FC + OCF*) / (P - v). Here is the breakdown of this formula:

• FC represents fixed costs, which do not change with the level of production or sales. These are the costs that the business incurs regardless of the amount of goods sold.

• OCF* refers to the required operating cash flow at break-even. It typically includes the amount of cash that needs to come in to cover fixed costs and support operations.

• P stands for the price at which the product is sold per unit, and v is the variable cost per unit, which changes with the amount produced. The difference (P - v) gives the contribution margin per unit, which is the amount available to cover fixed costs after the variable costs have been deducted.

In this equation, by dividing the sum of fixed costs and the