To determine the minimum sales level you should compute the financial break-even point. The amount of earnings before interest and taxes at which there will be no net income or no earnings per share is known as the financial break-even point. The financial break-even analysis focuses on the bottom line of the company's income statement.
It is equivalent to the sum of the company's interest expenditure, dividends paid to holders of preferred stock, and related taxes. Since interest costs and preferred dividends must be paid, they are included in the computation of financial break-even point, but common dividends, which are discretionary, are not.
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