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.