BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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financial risk
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cost of debts
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Detailed explanation-1: -Financial risk is the chance that a firm would fail to meet its payment obligations. Interest & Repayment on borrowed funds have to be paid regardless of whether or not a firm has earned a profit. The risk of default on payment is known as financial risk.
Detailed explanation-2: -Ans. Financial risk refers to a position when a company is not able to meet its fixed financial charges namely interest, preference dividend payment and repayment obligations.
Detailed explanation-3: -Financial risk refers to your business’ ability to manage your debt and fulfil your financial obligations. This type of risk typically arises due to instabilities, losses in the financial market or movements in stock prices, currencies, interest rates, etc.
Detailed explanation-4: -Financial risk is a potential future situation that causes your business to lose money. This situation could affect your cash flow and leave you unable to meet your obligations.
Detailed explanation-5: -Based on this, financial risk can be classified into various types such as Market Risk, Credit Risk, Liquidity Risk, Operational Risk, and Legal Risk.