Capital Structure and Leverage(英文版)(ppt 47页)

Capital Structure and Leverage(英文版)内容提要：
Business risk is affected primarily by:
Uncertainty about demand (sales).
Uncertainty about output prices.
Uncertainty about costs.
Product, other types of liability.
Operating leverage.
What is operating leverage, and how does it affect a firm’s business risk?
Operating leverage is the use of fixed costs rather than variable costs.
If most costs are fixed, hence do not decline when demand falls, then the firm has high operating leverage.
Business Risk vs. Financial Risk
Business risk depends on business factors such as competition, product liability, and operating leverage.
Financial risk depends only on the types of securities issued:  More debt, more financial risk.  Concentrates business risk on stockholders.

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