In what ways are companies that fail different from those that continue to do business? A study compared various characteristics of 68 healthy and 33 failed firms. One of the variables was the ratio of current assets to current liabilities. Roughly speaking, this is the amount that the firm is worth divided by what it owes.
(a) Describe the two distributions. Be sure to refer to specific output given on the last page.
(b) We expect that failed firms will have a lower ratio. Describe and test appropriate hypotheses of these data. Clearly state your conclusions.
(c) Are the assumptions of the test in (b) met? Why or why not?
