Which of the following factors would tend to reduce a firm's business risk?
A)The firm changes its operations to make them more cyclical.
B)The firm increases its operating leverage.
C)The firm increases the fixed costs that are associated with the manufacture of its products.
D)The firm shifts its sales strategy in an effort to sell substantially more high-priced durable goods than low-priced staple goods, which reverses the sales trend that occurred during the past decade.
E)The firm takes actions to improve the stability of its day-to-day operations.

Question

Quizplus · Accepted Answer

Taking actions to improve the stability of its day-to-day operations would reduce a firm's business risk by minimizing unexpected disruptions or fluctuations in its operations, thereby making its business more predictable and stable. The other options would likely increase business risk by increasing the firm's exposure to economic cycles, increasing fixed costs, or introducing sales trends that may not be sustainable.

Which of the Following Factors Would Tend to Reduce a Firm's