Fundamental betas are estimates of future betas, based upon both industry-specific and firm-specific balance sheet and income statement data. Researchers have found that the average betas of different industries vary as a result of differences in their business risk. In addition, researchers have discovered that financial statement relationships are useful in predicting a firm’s future beta. Betas change over time as a firm’s growth, dividend-payout ratio, earnings variability, financial leverage, and size change. Studies have found that increased financial leverage and increased variability in sales and EBIT lead to larger betas, while higher dividend- payout ratios lead to lower betas.