Business risk, as defined in terms of variation in a firm's operating performance and measured by EBIT, would be effected by variation in all of the following, except:
A)anticipated changes in federal regulations.
B)business operations.
C)expenses.
D)revenues.

Question

Quizplus · Accepted Answer

Anticipated changes in federal regulations would not directly affect a firm's operating performance and therefore would not affect business risk as measured by EBIT. However, changes in federal regulations may indirectly affect a firm's operations or expenses, which would in turn affect EBIT and therefore business risk. Variation in business operations, expenses, and revenues would directly affect EBIT and therefore business risk.

Business Risk, as Defined in Terms of Variation in a Firm's