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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
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: Hack Wellington Co. and Mob Coffee Inc. It is your job to evaluate the relative business and financial risks of Hack Wellington Co. and Mob Coffee Inc. 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 table outlines some of Hack Wellington Co/s and Mob Coffee Inc.'s characteristics: Use the given financial data to indicate which firm has the higher degree of each type of risk. Which firm has more financial risk? Hack Wellington Co. Mob Coffee Inc. Which firm has more business risk? Mob Coffee Inc. Hack Wellington Co
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