If a firm uses no debt,the uncertainty inherent in projections of future returns on equity can be described as business risk.

Question

Quizplus · Accepted Answer

Business risk refers to the uncertainty associated with a firm's future earnings or returns on equity, which can arise from various factors such as competition, market conditions, technological changes, and management decisions. In the absence of debt, the risk of bankruptcy due to financial leverage is eliminated, but the business risk remains as an inherent part of the firm's operations and industry environment.

If a Firm Uses No Debt,the Uncertainty Inherent in Projections