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2. Understanding business financial risks The two firms have the same level of total assets and expected net operating profit after taxes (NOPAT), but they
2. Understanding business financial risks
The two firms have the same level of total assets and expected net operating profit after taxes (NOPAT), but they differ on two critical characteristics: total debt and the standard deviation of expected NOPAT. The following outlines some of Markungs Co.s and Beatnik Designs Co.s characteristics.
Markungs Co Beatnik Designs Co.
Total assets | $4,400,000 | $4,400,000 |
Total debt | $1,012,000 | $1,980,000 |
Expected NOPAT | $1,056,000 | $1,056,000 |
Standard Deviation of expected NOPAT | $294,800 | $189,200 |
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