Page 115 - DBP5043
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WHAT IS RISK
Risk is defined as the relative dispersion or
variability in the firm’s expected earnings before
interest and taxes (EBIT)
Classification of risk
RISK
Systematic risk (non-
Unsystematic risk
(diversifiable risk) diversifiable risk)
Business Financial
risk risk
Variability Direct
Variability Uncertainty Can be in profit result of Relates to
in a firm’s with measure induced by the firm the firms
EBIT investment using the use of financin inability to
CV
debt
earning capital g meet in the
debt
decision
obligation
