A decrease in fixed financial costs will result in a(n)________.
A) increase in financial risk
B) decrease in financial risk
C) increase in operating leverage
D) decrease in operating leverage

Question

Quizplus · Accepted Answer

Fixed financial costs refer to expenses that remain constant regardless of the amount of sales or revenue generated. These costs include expenses such as interest on loans or lease payments for equipment. A decrease in fixed financial costs would result in a decrease in the overall financial risk for a company, as there would be less pressure to meet these expenses. This reduction in financial risk could lead to greater flexibility and stability for the company.

A Decrease in Fixed Financial Costs Will Result in A(n)________