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What is the difference between Business Risk & Financial Risk?

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تم إضافة السؤال من قبل Mrinal Deb , Manager - Finance and Accounts , Comfort Diagnostic & Nursing Home
تاريخ النشر: 2015/03/12
Soumya Kanta Nayak
من قبل Soumya Kanta Nayak , Branch Manager , ICICI Bank Ltd

business risk is the risk for  which the business may not generate enough profit or make loss. The risk is like taste of consumers changed, govt policies, operational uncertainties.

and the financial risk is that the risk of not generating enough cash flow to meet the creditors demand.

Anas  Dawah
من قبل Anas Dawah , Senior Internal Auditor , Talal Abu-Ghazaleh Global (TAGI)

Business risk is the risk that the firm fails to achieve its objectives , and the probability it will has problems on its operations(for example a firm attain a loss of100000 $) ,because of the chang in the selling price, change in demand of the product, change in inputs price, and operating leverage (depending on Fixed costs on Company cost structure )

financial risi is the risk that the firm will be unable to pay debts Liabilities as they come due , and the failure to service these debts (interest)

Abdul Khalique
من قبل Abdul Khalique , Finance Manager , Value Real Estate & Construction

Business Risk and Financial Risk

Business risk refers to the risk associated with the firm’s operations. It is an unavoidable risk

because of the environment in which the firm has to operate and the business risk is represented

by the variability of earnings before interest and tax (EBIT). The variability in turn is influenced by

revenues and expenses. Revenues and expenses are affected by demand of firm’s products,

variations in prices and proportion of fixed cost in total cost.

Whereas, Financial risk refers to the additional risk placed on firm’s shareholders as a result

of debt use in financing. Companies that issue more debt instruments would have higher

financial risk than companies financed mostly by equity. Financial risk can be measured by

ratios such as firm’s financial leverage multiplier, total debt to assets ratio etc.

Mohsin Diwan
من قبل Mohsin Diwan , Accountant , Quality Punch

Business risk is that what happens if you may not recover your investment. On the other hand Financial risk is something about cash flows is not enough to fulfill your operation requirement which in result delaying to pay suppliers money.

مستخدم محذوف‎
من قبل مستخدم محذوف‎

Well as far as i am is concern,its depends how well you plan and project your profitability, without concenses its very hard to achieve the company objective

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