Regarding ratio analysis as predictor of bankruptcy

Assignment Help Financial Management

Reference no: EM131176368

Which one of these statements is correct regarding ratio analysis as a predictor of bankruptcy?

Firms with a total debt to total assets ratio of 75% or less tend to survive rather than fail.

Failing firms have a lower EBITDA to total liabilities ratio than surviving firms.

As early as four years before they went bankrupt, failing firms were earning a higher return on assets than firms that survived.

On average, failing firms have a lower ratio of liabilities to assets than surviving firms.

Reference no: EM131176368

Questions Cloud

Firm which does not pay any distribution of profit : There is a firm which does not pay any distribution of profit for 6 years. In year 6 it pays dollar 3 out of dollar 5. The dividend remains constant for 4 years. Afterward, it grows perpetually. The ROE is .05. The beta levered is 1.5, while the defa..

Consider the role of financial intermediaries : Consider the role of financial intermediaries (banks, credit unions, insurance companies, broker/dealers, etc.) and their impact in/on your economic life.

Capital budgeting timeline with their periods and cash flows : You have the following capital budgeting timeline with their periods and cash flows: 0 = ?, 1 = $4500, 2 = $4900, 3 = ?, 4 = ?, 5 = $4000, 6 = $3750. The terminal value of the project is $34,806.73. The NPV = $1311.33 and the cash flow in period 4 ca..

Prepare for their future child by saving appropriately : Saving for a Child’s Education. Harry and Sally want to prepare for their future child by saving appropriately for his/her college education. Suppose they anticipate needing the funds 20 years from today. Assume that the cost of a four-year college e..

Regarding ratio analysis as predictor of bankruptcy : Which one of these statements is correct regarding ratio analysis as a predictor of bankruptcy?

Calculate the break-even volume : A regional soft drink manufacturer is considering opening a new manufacturing plant in the Midwest.Its total fixed costs are $100 million, with the cost of the new plant included in that figure at a depreciatedvalue based on the expected life of the ..

Calculate the annual OCF for this project : Pappy’s Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy’s paid $127,000 for a marketing survey to determine the viability of the product. It is felt that Potato Pet will generate sales of $582,000 p..

What will the annual payments on the bank loan be : Temple Freight Forwarding Company needs $300 000 to finance the construction of several prefabricated metal warehouses. The firm that manufactures the warehouses has offered to finance the purchase with a $50 000 down-payment followed by five annual ..

User Account

All Pages