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business risk

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Financial Dictionary

Business Risk

The risk that a company will not have adequate cash flow to meet its operating expenses.

Investopedia Commentary

A company's risk is composed of financial risk, which is linked to debt, and risk, which is often linked to economic climate. If a company is entirely financed by equity, it would pose almost no financial risk, but, it would be susceptible to business risk or changes in the overall economic climate.

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See also: Country Risk, Financial Risk, Liquidity Risk, Market Risk, Risk, Risk Lover, Risk Neutral, Systematic risk, Unsystematic Risk

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Financial Dictionary

business risk

The risk that a business will experience a period of poor earnings and resultant failure. Business risk is greatest for firms in cyclical or relatively new industries. Business risk affects holders of stocks and bonds, since a firm may be unable to pay dividends and interest.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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