where sales growth is the annual growth rate of a firm’s sales [(sales in year t − sales in year t − 1)/total assets in year t − 1].
We define ROA as the ratio of the sum of a firm’s operating income, interest receivables, and dividends to total assets in year t − 1.
The current assets ratio is a proxy for the demand for short-term credit.
The current assets ratio is the ratio of a firm’s current assets, excluding cash, to total assets in year t − 1.
Collateralizable assets are a proxy for collateral, which we define as the ratio of tangible fixed assets to total debts in year t − 1.
We define the interest rate as the ratio of a firm’s interest expenses to the sum of its short- and long-term debt and discounted notes receivable in year t − 1.