A cyclical company's sales and earnings are heavily influenced by aggregate business activity.

Question

Quizplus · Accepted Answer

Cyclical companies are those whose sales and earnings are closely tied to the overall economic conditions and business cycle. As such, they tend to experience significant fluctuations in revenue and profits during periods of expansion and contraction in the broader economy. This makes them highly sensitive to changes in consumer and investor sentiment, as well as to shifts in government policy, interest rates, and other macroeconomic factors. Examples of cyclical sectors include construction, automotive, manufacturing, and retail.

A Cyclical Company's Sales and Earnings Are Heavily Influenced by Aggregate