Question
In: Finance
How would you asses the overall risk structure of the company in terms of its operating...
How would you asses the overall risk structure of the company in terms of its operating risks and financial risks (debt to capitalization risk
Solutions
Expert Solution
Risk- It is the uncertainty, an unforeseen event that may occur in future.
Operational risk- This risk is related to company's normal course of operations. Operational risk occurs when a company does business in an industry and it has many competitors in the same industry. This is different from financial and systematic risk. This risk occurs due to operational failure or human error or fraud and criminal activity in the business, a wrong decision may lead to loss for business.
Financial risk- This is related to capital structure decision, when there is heavy debt in company's capital structure, company's obligation increases and it has to pay higher interest on it. If company is not able to pay its debt, it files for bankruptcy, if company's debtors default in repaying the debt or payment of goods then also company suffers. Financial risk also refers to the possibility of shareholders of the company of losing money.
Overall risk- Overall risk is the mix of financial, operational, strategic and compliance risk in which financial and operational are the main risks that affect a company's revenues, profits and brand image in the market, companies try to minimize these risks, companies cut debt in the capital structure, have tight credit policy and pricing strategies so as to minimize the operational and financial risk.
jeff jeffy answered 2 years agoRelated Solutions
How would you define operating risk and financial risk for enterprises? What resources would you access...
If you are the instructor of a course, how would you structure the course and its...
What is the risk profile of the company Microsoft (The overall risk to there is to...
How would you describe Black Diamond’s ethics in terms of how it treats its employees at...
how would you describe black diamond's ethics in terms of how it treats its employee at...
1. Difficult decisions a social worker may make an adoption practices? 2. How would you asses...
How does the industry impact a company’s risk? Would the risk associated with the industry/company you...
how would you structure an organization to ensure that its culture of accountability is actually enacted
how would you structure an organization to ensure that its culture of accountability is actually enacted....
How would asses Maslow’s hierarchy of needs value to a nurse educator, strength and weakness?
- Describe the principles and operations of movement sensors: Doppler-Effect Velocity sensor and Spring-Mass Accelerometor; State the...
- This is all one question, thank you so much in advance. The Bigbee Bottling Company is...
- For Questions 1-3: consider the following code: public class A { private int number; protected String...
- You are tasked with assessing the health department’s intervention program in preventing recurrence of acute alcohol...
- Compare the MOSFET, JFET , and BJT and identify the reasons these devices behave differently. What...
- How would you use SAS Enterprise Miner to create a neural network model of your example?
- Explain the use of neural networking modeling in predictive analytics.