question archive A friend has mentioned that she has read somewhere that the following variables can be used to predict bankruptcy: (a) the company debt ratio; (b) the interest coverage; (c) the amount of cash relative to sales or assets; (d) the return on assets; (e) the market-to-book ratio; (f) the recent return on the stock; (g) the volatility of the stock returns
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A friend has mentioned that she has read somewhere that the following variables can be used to predict bankruptcy: (a) the company debt ratio;
(b) the interest coverage;
(c) the amount of cash relative to sales or assets;
(d) the return on assets; (e) the market-to-book ratio;
(f) the recent return on the stock;
(g) the volatility of the stock returns.
The problem is that she can't remember whether a high value of each variable implies a high or a low probability of bankruptcy. Can you help her out?
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