Business risk in company, Financial Accounting

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Q. Business risk in company?

Business risk is the likelihood of a company experiencing changes in the level of its profit before interest as a result of changes in turnover or operating costs. For this reason it is as well referred to as operating risk. Business risk narrates to the nature of the business operations undertaken by a company. For instance we would expect profit before interest to be more volatile for a luxury goods manufacturer than for a food retailer since sales of luxury goods will be more closely linked to varying economic activity than sales of a necessity good such as food


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