Operating risk arises from the asset side of the business, and financing risk arises from debt.

Name: Operating risk arises from the asset side of the business, and financing risk arises from debt.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Operating risk is associated with the day-to-day operations of the business, which are reflected in the assets it uses to generate revenue. Financing risk, on the other hand, arises from the use of debt to finance the business, impacting the liability and equity side of the balance sheet.

Operating Risk Arises from the Asset Side of the Business