A linear probability model you have developed finds there are two factors influencing the past bankruptcy behavior

Question:

A linear probability model you have developed finds there are two factors influencing the past bankruptcy behavior of firms: the equity multiplier and the total asset turnover ratio. Based on past bankruptcy experience, the linear probability model is estimated as:

PD_i = 0.02 (Equity multiplier) – 0.01 (Total asset turnover)

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.