An increase in fixed operating and financial cost results in an increase in risk, since the firm will have to achieve a higher level of sales just to break even.

Question

Quizplus · Accepted Answer

When fixed operating and financial costs increase, the company's break-even point increases as well. This means that the company would have to achieve a higher level of sales just to cover its fixed costs, resulting in higher risk if sales do not meet the new break-even point.

An Increase in Fixed Operating and Financial Cost Results in an Increase