Question

T or F Changes in financing terms will influence financial risk but not business risk. a....

T or F

Changes in financing terms will influence financial risk but not business risk.

a. True

b. False

Business   Finance   
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Homework Answers

Answer #1

The Correct answer is False

The financial risk refers to the risk that the company would not be able to make payments to it's lenders and the business risk refers to the risk that the company would not be able to make profit at the same margin of previous years.

The change in financing terms will also lead to fluctuations in the profit margin of the company according to the terms and conditions of the financing and the debt of the company also fluctuates according to it.

Therefore, It can be said that fincnacing terms do impact the financial and business risk both.

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