The correct answer is A. EBIT.
Financial break-even is the level of sales at which a company’s operating income (EBIT) is equal to its interest expense. This means that the company is not making any profit, but it is also not losing any money.
If a firm has no preference share capital, then its only sources of financing are debt and equity. The interest expense on debt is a fixed cost, while the dividend on equity is a variable cost. This means that the financial break-even point is the point at which the company’s EBIT is equal to its interest expense.
Option B, interest liability, is incorrect because it is not a measure of the company’s profitability. Interest liability is simply the amount of interest that the company owes on its debt.
Option C, equity dividend, is incorrect because it is not a measure of the company’s profitability. Equity dividend is the amount of money that the company pays out to its shareholders in the form of dividends.
Option D, tax liability, is incorrect because it is not a measure of the company’s profitability. Tax liability is the amount of money that the company owes in taxes.