Unsystematic Risk It is unique and peculiar to a firm or industry.

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Presentation transcript:

Unsystematic Risk It is unique and peculiar to a firm or industry.

Classification of Unsystematic risk Business Risk Financial Risk

Business Risk Business Risk = Revenue – EBIT(Earnings Before Interest and Taxes)

Types of Business Risk

Internal Business Risk Fluctuations in Sales Sales level has to be maintained. Face competition. Build wide customer through distribution channels.

Research and Development Product should not be obsolete. Create in-house R&D Programme

Personnel Management Frequent strikes and lockouts result in loss Motivation of employees result in profit.

Fixed cost Increase in Fixed cost leads to increase in price of a product

Single product Company has to produce variety of products. Expansion of business.

External Business Risk Social and regulatory factors Government tariff policy has to be adhered

Political risk Adhere to the changes in government policy

Business cycle

Financial Risk Variability in income Financial Risk = EBIT-PBT(Profit Before Tax)