How would you assess Avons business risk? Setting aside the way the company is financed, how significant are the marketplace risks Avon faces; how uncertain are the companys future operating cash flows? What does your assessment of Avons business risk suggest about the level of financial leverage the company can prudently support?

How big a threat would it be to Avon if the company took on too much debt and had difficulty servicing it? How costly would financial distress be to Avon? Explain.