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Following is information about Gamma Company and Rho Industries: a. Which firm would be considered to have the higher (i) business risk, (ii) financial risk,
Following is information about Gamma Company and Rho Industries: a. Which firm would be considered to have the higher (i) business risk, (ii) financial risk, and (iii) total risk? Explain your answers. (i) has higher business risk because its degree of operating leverage is (ii) -SelectRho (iii) has higher financial risk because its degree of financial leverage is has higher total risk because its degree of total leverage is (i) GammaActualEBIT=ExpectedEBIT Rho Actual EBIT= Expected EBIT (ii) Gamma Actual EPS = Expected EPS Rho Actual EPS = Expected EPS
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