The file P14_07.xlsx contains data on 74 companies that have either gone bankrupt or haven’t. The data set also contains data on five frequently quoted accounting ratios.

a. Create a pivot table that shows the average of each ratio, broken down by the Yes/No values in column G. Comment on which ratios seem to have an effect on whether a company goes bankrupt.

b. Use logistic regression to classify companies as bankrupt or not, using all five of the accounting ratios. Does this do a good job of classifying? Are any of the ratios insignificant?

c. Experiment with logistic regressions that use only two of the accounting ratios. Which pair classifies about as well as in part b, but with both ratios significant? Could the high p-values in part b be due to multicollinearity?