Variables used in the regression
Market Debt Ratio = 0.2538 + 0.144 (Tax Rate) - .5090 (Expected growth rate) + 0.0181 (Payout Ratio)
With the following t statistics
T statistic for intercept = 19.99
T statsitic for tax rate = 3.86
T statistic for expected growth rate = 11.24
T statistic for payout ratio = 2.02
Market Debt Ratio = 0.2617 + 0.116 (Tax Rate) - .2314 (Expected growth rate) + 0.0219 (Payout Ratio)
With the following t statistics
T statistic for intercept = 33.28
T statsitic for tax rate = 4.57
T statistic for expected growth rate = 12.30
T statistic for payout ratio = 3.70
Assume that you want to estimate the market debt ratio for a firm with the following characteristics, using the US regression
Payout Ratio = 40%
Effective Tax Rate= 20%
Expected growth rate in EPS = 15%
Expected Debt Ratio= 0.2538 -.144 (20) +.509 (.15) + 0.0181(.40) = ..374 or 37.40%
If your predicted value is less than zero, your predicted debt ratio is zero.