The probability that a firm will become bankrupt is largely dependent on its level of both business and financial risk.

Question

Quizplus · Accepted Answer

This statement is true. Business risk refers to the uncertainty and variability of a firm's operations and sales, which can affect its ability to generate revenue and profits. Financial risk, on the other hand, refers to the uncertainty and variability of a firm's financing and capital structure, which can affect its ability to meet its financial obligations and repay its debts. A firm that faces high levels of both business and financial risk is more likely to become bankrupt than a firm that faces lower levels of these risks.

The Probability That a Firm Will Become Bankrupt Is Largely