Financial ratios and break-even conditions: which statement is WRONG for chemical plant performance metrics?

Introduction / Context:Key ratios guide financial health checks in process industries. Misinterpreting definitions or break-even conditions can lead to incorrect pricing, budgeting, and investment decisions.

Given Data / Assumptions:

• Standard definitions for equity, ROE, and working capital ratios.
• Break-even point (BEP) implies zero accounting profit.

Concept / Approach:At BEP, total revenue equals total cost. Therefore, NSR equals the total cost of production. Any statement asserting that total cost exceeds NSR at BEP is incorrect, as that would imply a loss, not break-even.

Step-by-Step Solution:1) Review BEP: total cost = total revenue, profit = 0.2) Check each statement: (a), (b), and (c) are standard correct definitions.3) Statement (d) claims total cost > NSR at BEP; that would mean negative profit, which contradicts the BEP definition.4) Hence (d) is the wrong statement.

Verification / Alternative check:Graphical BEP analysis confirms equality of total cost and total revenue at the intersection.

Why Other Options Are Wrong:They are correct definitions: equity composition, ROE formula, and working capital turnover are all standard. The added current ratio in option (e) is also correct and widely used.

Common Pitfalls:Assuming margin at BEP or confusing cash break-even (covering cash costs only) with accounting break-even.

Final Answer:Total cost of production is more than NSR at the break-even point.