Dun & Bradstreet reports, among other things, information about new business incorporations and number of business failures over several years. Shown here are data on business failures and current liabilities of the failing companies over several years. Use these data and the following model to predict current liabilities of the failing companies by the number of business failures. Discuss the strength of the model.

y = b0bx1 ϵ

Now develop a different regression model by recoding x. Use Tukey's four-quadrant approach as a resource. Compare your models.

Rate of Business Current Liabilities

Failures of Failing Companies

(10,000) ($ millions)

44 .............. 1,888

43 .............. 4,380

42 .............. 4,635

61 .............. 6,955

88 ..............15,611

110 ..............16,073

107 ..............29,269

115 ..............36,937

120 ..............44,724

102 ..............34,724

98 ..............39,126

65 ..............44,261