What question did this study set out to answer?

The aim is to explore how lease capitalization affects the predictability of financial ratios relevant to bankruptcy prediction.

Capitalization of Leases and the Predictability of Financial Ratios: A Comment.

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Comment discusses the influence of lease data on financial ratio predictability for bankruptcy prediction.

The aim is to explore how lease capitalization affects the predictability of financial ratios relevant to bankruptcy prediction.
Analysis of lease data effects on financial ratios
Comparative assessment of problem versus non-problem firms
Evaluation of prior findings on debt financing and expansion before bankruptcy
Critique of comprehensiveness and statistical techniques used in earlier studies
Lease capitalization improves the asset and liability base in financial assessments.
Problem firms show greater reliance on leasing compared to non-problem firms.
Prior research indicates rapid expansion financed by increased debt before firm failure.
A need for more comprehensive analysis on lease usage in ratio predictability.

Edward I. Altman (1976) studied this question.

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