Financial risk
Financial risk is associated with the bottom of the income statement; it deals with earnings and how business risk and the financial structure of the firm impact them.
This type of risk is related to the firm’s use of financial leverage (debt).
Interest payments are fixed costs the firm must pay to stay out of bankruptcy, regardless of the firm’s profitability.
Some people, in fact, will say that a firm with no debt has no financial risk.
Also read: Understanding Risk
Partitioning Risk
Business risk
Financial risk
Purchasing power risk
Interest rate risk
Foreign exchange risk
Political risk
Social risk
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Thursday, 22 January 2009
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment