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 PDi 0 02 (Equity multiplier) 0 01 (T...

In statistics a linear probability model is a distinct situation of a binomial ...

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 ratio. Based on past bankruptcy experience, the linear probability model is estimated as:
PDi = 0.02 (Equity multiplier) – 0.01 (Total 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.