Cash Flow Break Even Point

Give an example of cash flow which will determine the break even point and the percentage of ROI.

Questions by nelson_2008

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vasudeo007

  • Oct 12th, 2008
 

The question is incomplete.

If you want to know break even point then you need to know fixed and variable costs and sale price.

Moreover if you want to know Return Over Investment (ROI) then you need to know Investment in the first place.

Investment in the above sentence means Capital + Reserves and surpluses - dues to preference share holders.

From a mere cash flow statement you cannot come to know the investment part. So you cannot compute ROI. You may be able to compute break even point if the costs that are visible in cash flow statement can be bifurcated into both easily.

Moreover sale include cash + credit sale. In cash flow statement only cash sales are recorded.

So at the end, cash flow statement cannot tell you Break even point and ROI.

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