The variability of operating earnings is associated with
A) business risk.
B) liquidity risk.
C) exchange rate risk.
D) financial risk.
E) market risk.

Question

Quizplus · Accepted Answer

Operating earnings refer to a company's earnings before interest and taxes (EBIT), which is a measure of its profitability. The variability of operating earnings is primarily associated with business risk, which is the risk that a company's operations will generate lower than expected profits or even losses. Factors such as changes in consumer demand, competition, and input costs can all affect a company's operating earnings and increase its business risk. Liquidity risk, exchange rate risk, financial risk, and market risk can also impact a company's earnings, but they are typically not directly related to operating earnings variability.

The Variability of Operating Earnings Is Associated with