Question: 14.8 A financial consultant is interested in testing whether the proportion of debt that exceeds equity is the same irrespective of the magnitude of the

14.8 A financial consultant is interested in testing whether the proportion of debt that exceeds equity is the same irrespective of the magnitude of the firm’s assets. Sixty-two firms are classified into three groups according to asset size and the data below are obtained on the numbers with debt greater then equity. Carry out the test.

Firm Asset Size ($1000)

Less Than 500 500–2000 Over 2000 Total Debt less than equity 7 10 8 25 Debt greater than equity 10 18 9 37 Total 17 28 17 62

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