Ace the DECA Financial Consulting Challenge 2025 – Unleash Your Business Superpower!

Considering financial risks, interest rates and inflation are fundamental factors that significantly impact a business's financial health and decision-making. Interest rates affect the cost of borrowing; higher rates can lead to increased expenses for companies that rely on debt financing, potentially squeezing profit margins. On the other hand, inflation influences the purchasing power of consumers and can affect cost structures, including raw materials and wages. When a business faces rising inflation, it may need to adjust its pricing strategy to maintain profitability, which can also affect sales volume and demand.

Both interest rates and inflation are macroeconomic factors that can lead to volatility in financial markets and influence investment decisions. Understanding these parameters is critical for strategic planning and risk management in financial consulting, as they shape expectations for future cash flows and overall economic stability.