Financial risk is easier to bear if you have stable cashflows such as a bank. A cyclical company will not choose to add to its business risk by adding debt since it already has an inherent risk to operations An analyst of financial statements will look at these ratios and make determinations of the risk to a company's earnings flow Can the company make fixed payments Can the company grow its earnings consistently These judgments will eventually impact the company's stock price. What is your thought?

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ANSWER Financial risk is easier to bear if you have stable cashflows such as a bank A cyclical company will not choose to add to its business risk by ... View the full answer