Explain core concepts related to business risk and recommend sound financial decisions based on analysis of a firm’s capital structure and capital budgeting techniques.

Assessment description – mini case 15

There is a chance that a business will experience a bad outcome. This could result from a number of factors, such as market volatility and economic downturns. When it comes to analyzing a firm’s capital structure, this involves looking at how much debt and equity they have and what their current ratio is (debt to equity) in order to determine if there are any areas which need improvement accordingly.

Additionally, capital budgeting techniques can also be used in order to decide which projects should be allocated funds for – by taking into account potential costs associated with them as well as their expected returns over time. Thus, making sound financial decisions involves carefully weighing these risks against benefits while still ensuring that any investments made are within the company’s capacity/ability to pay back without issue.

Overall, business risk is something that all firms must take into consideration when making decisions related to their finances – thus having an understanding of core concepts associated with it along with various budgeting strategies will greatly improve one’s ability in determining the best course of action moving forward accordingly.

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