Thought Question

Thought Question - decisions. * Sales Volume Variability *...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
* Thought Question Why does the typical physician  work so many hours? Answer in a few minutes…    * Business (aka Operating) Risk:       Variability or uncertainty  associated with operating income  (i.e. EBIT).  Note:  Specific industry  influences  business risk. * Financial Risk:       Risk of distress or  bankruptcy due to the use of fixed  cost financing. 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Note:  Management  influences the  financial risk with VC vs. FC 
Background image of page 2
Background image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: decisions. * Sales Volume Variability * Competition * Cost Variability * Product Diversification * Product Demand * Operating Leverage The use of fixed operating costs as opposed to variable operating costs. A firm with relatively HIGH fixed operating costs will experience MORE variable operating income if sales change. Fixed Costs = Operating Leverage = Business Risk...
View Full Document

This note was uploaded on 11/23/2011 for the course BUS M 301 taught by Professor Jimbrau during the Summer '11 term at BYU.

Page1 / 3

Thought Question - decisions. * Sales Volume Variability *...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online