Altman's bankruptcy prediction model places a coefficient of 3.3 on the earnings before interest and taxes divided
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Question:
Altman's bankruptcy prediction model places a coefficient of 3.3 on the earnings before interest and taxes divided by total assets variable but a coefficient of only 1.0 on the sales to total assets variable. Does this mean that the earnings variable is 3.3 times as important in predicting bankruptcy as the asset turnover variable? Explain.
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