Multiple choice

Directions: State whether the following statement is True Or False.

Financial risk refers to the variability in operating profit due to change in sales.

  1. True

  2. False

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Financial risk refers to the risk associated with the use of debt (leverage) in the capital structure. Variability in operating profit due to changes in sales is defined as operating risk.