To sum up, Emery and Cogger [5] have raised several interesting questions concerning the derivation of the safety index (as well as the related risk of ruin) and the interpretation of that index which needed to be addressed. While the potential limitations discussed are theoretically possible, closer examination reveals that most of the concerns raised are unlikely to occur in practical applications, although certain of the procedures utilized were in need of further explanation. Several of these issues also provide extensions of the present work to make the estimation of the risk of ruin an even more robust measure of the potential for corporate failure.

Recently, there has been an increased interest in the role that bankruptcy or ruin plays in the valuation process. Several authors have discussed this subject (Gordon [17], Quirk [27], and Smith [35]) and some have constructed theoretical models attempting to show how the probability or risk of ruin introduces an element of risk into valuation (for example, Bierman [5], Borch [8], Tinsely [37]). The question of corporate survival is, therefore, central to the financial considerations of the firm. None, however, has attempted empirical tests of the role of such a probability in valuation.

Jonathan S. H. Kornbluth, Joseph D. Vinso, Capital Structure and the Financing of the Multinational Corporation: A Fractional Multiobjective Approach, The Journal of Financial and Quantitative Analysis, Vol. 17, No. 2 (Jun., 1982), pp. 147-178

1. An Introduction to Financial Management.Appendix: Methods of Depreciation. 2. The Role of Financial Markets and Interest Rates in Financial Management. 3. Evaluating a Firms Financial Performance and Measuring Cash Flow. 4. Financial Forecasting, Planning, and Budgeting. 5. The Time Value of Money. 6. Risk and Rates of Return.Appendix: Measuring the Required Rate of Return: The Arbitrage Pricing Model. 7. Bond Valuation. 8. Stock Valuation.Appendix: The Relationship Between Value and Earnings. 9. Capital-Budgeting Decision Criteria. 10. Cash Flows and Other Topics in Capital Budgeting. 11. Capital Budgeting and Risk Analysis. 12. Cost of Capital. 13. Analysis and Impact of Leverage. 14. Planning the Firms Financing Mix. 15. Dividend Policy and Internal Financing. 16. Working-Capital Management and Short-Term Financing. 17. Cash and Marketable Securities Management.Appendix: Cash-Management Models: Split Between Cash and Near Cash. 18. Accounts Receivable, Inventory, and Total Quality Management. 19. Term Loans and Leases. 20. The Use of Futures, Options, and Currency Swaps to Reduce Risk.Appendix: Convertible Securities and Warrants. 21. Corporate Restructuring: Combinations and Divestitures. 22. International Business Finance. Appendix A: Using a Calculator. Appendix B: Compound Sum of $1. Appendix C: Present Value of $1. Appendix D: Sum of an Annuity of $1 for n Periods. Appendix E: Present Value of an Annuity of $1 for n Periods. Appendix F: Solutions for Selected End-of-Chapter Problems. Glossary. Organization Index. Subject Index.