Use the Following Data: ROA = 10%; Total Liabilities =

question 48

Multiple Choice

Use the following data: ROA = 10%; Total liabilities = 90% of assets; EBITDA = 10% of liabilities. Calculate the relative chance of failure using the following model: Log (relative chance of failure) = -6.445 - 1.192 ROA + 2.307 (liabilities/assets) - 0.346(EBITDA/liabilities) .

• A)1.70 percent
• B)1.09 percent
• C)0.16 percent
• D)None of the options are correct.

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Definitions:

Pure Solvent

A liquid substance that is able to dissolve other substances (solute), without any impurities or admixtures.

Solution

A homogeneous mixture composed of two or more substances in which the solute is completely dissolved in the solvent.

Molality

A measure of the concentration of a solute in a solution in terms of amount of substance per mass of solvent, specifically moles of solute per kilogram of solvent.

Molarity

A measure of the concentration of a solute in a solution, expressed as the number of moles of solute per liter of solution.