A decrease in fixed financial costs will result in ________ in financial risk.
A) an increase
B) a decrease
C) no change
D) an undetermined change

Question

Quizplus · Accepted Answer

Fixed financial costs represent costs that do not vary with changes in sales volume, such as interest payments on debt or leasing expenses. If these costs decrease, the company's overall financial risk decreases since it will require less revenue to cover these costs. Therefore, option B is the correct answer.

A Decrease in Fixed Financial Costs Will Result in ________