The original article by the author reported the effects of changing data on the predictive ability of financial ratios. Much of what Professor E.I. Altman suggests involves the comparison of alternative models using lease data. Altman implies that the research failed to extend sufficient attention to the possibility of equality of relative leases between bankrupt and non-bankrupt firms. Obviously, if bankrupt and non-bankrupt firms have the same relative amount of long-term lease commitment, the comparison of ratios with lease data to ratios without lease data will end in a draw. One of the problems in undertaking research of the type being reported was availability of data. Locating failed firms which had reported leases in their financial statements limited the size of the sample. Additionally, the necessity of using data for 5 consecutive years imposed the problem of a changing economic environment over the 5 years in question. No new ratios were invented for this research because the objective was to take a standard model specification and compare its ability to predict bankruptcy with and without the capitalized data.

Presents a study on the predictive power of capitalization versus footnote disclosure of long-term leases. Description and definition of financial ratios and bankruptcy; Research design and data; Effect of capitalization on established tools of the financial statement user; Methods for testing predictive ability; Limitations of the research.

Congress has re-enacted the accelerated amortization deduction for certified pollution control facilities, presumably to stimulate investments in such facilities. Through the use of a present-value federal income tax impact model, it is shown that rarely will the provision serve as a tax "incentive" for this type of investment when elected by a manufacturing firm.