Identify the statement that is incorrect?

a. Lower financial leverage involves lower risk.

b. Higher financial leverage involves higher risk.

c. Risk is higher if a company has more liabilities.

d. Risk is higher if a company has more assets.

e. The debt ratio is one measure of financial risk.

The statement " Risk is higher if a company has more assets " is incorrect.

Explanation:

Business risk is the volatility of a company's profits over a given time. Many businesses have a reasonably stable history of lifetime income, like utilities. You can forecast what the utility bills of your consumer will be in a certain sector. Many types of companies have more revenue volatility over time.

For example, automobile factories are very closely linked to the economic situation. If the nation is in decline, fewer young people are buying new cars and vehicle firms ' earnings are falling and vice versa. Automobile manufacturers are at greater business risk than utilities.