10AnalysisofFinancialStatements(投资分析与投.pptVIP

Risk Analysis Total risk of a firm has two components: Business risk The uncertainty of income caused by the firm’s industry Generally measured by the variability of the firm’s operating income over time Financial risk Additional uncertainty of returns to equity holders due to a firm’s use of fixed obligation debt securities The acceptable level of financial risk for a firm depends on its business risk Business Risk Variability of the firm’s operating income over time Business Risk Variability of the firm’s operating income over time Standard deviation of the historical operating earnings se