4. Understanding business and financial risks The total risk in a firm is determined by evaluating the firm's business risk and financial risk. As an analyst, Olivia is comparing two nearly identical manufacturing firms: Green Rabbit Manufacturing Company and Orange Snail Production Inc. It is your job to evaluate the relative business and financial risks of Green Rabbit and Orange Snail. The two firms have the same level of total assets and expected earnings before interest and taxes (EBIT), but they differ in two critical characteristic: total debt and the standard deviation of the expected EBIT. The following table outlines some of Green Rabbit's and Orange Snail's major attributes: Use the given financial data to indicate which firm has the higher degree of each type of risk. Which firm has more business risk? Green Rabbit Orange Snail Which firm has more financial risk? Green Rabbit Orange Snail