Question 7.18

7.18 Business bankruptcies in Canada.

Business bankruptcies in Canada are monitored by the Office of the Superintendent of Bankruptcy Canada (OSB).7 Included in each report are the assets and liabilities the company declared at the time of the bankruptcy filing. A study is based on a random sample of 75 reports from the current year. The average debt (liabilities minus assets) is $92,172 with a standard deviation of $111,538.

  1. Construct a 95% one-sample confidence interval for the average debt of these companies at the time of filing.
  2. Because the sample standard deviation is larger than the sample mean, this debt distribution is skewed. Provide a defense for using the confidence interval in this case.