CHAPTER 13 Capital Structure and Leverage Business vs. financial risk Optimal capital structure Operating leverage Capital structure theory What is business risk? Uncertainty about future operating income (EBIT), ., how well can we predict operating income? Probability Low risk | CHAPTER 13 QI Capital Structure and Leverage Business vs. financial risk Optimal capital structure Operating leverage Capital structure theory 13-1 What is business risk Uncertainty about future operating income EBIT . how well can we predict operating income Note that business risk does not include financing effects. 13-2 What determines business risk Uncertainty about demand sales . Uncertainty about output prices. Uncertainty about costs. Product other types of liability. Operating leverage. .
