problem with variable (figure divided by zero)
Posted: Sun Jul 15, 2012 7:56 pm
Hi guys
Im having a problem with a variable. My sample is 400 companies and one of my explanotory variables is the interest coverage ratio (ic) which is the companies profit divided by the interest it pays (profit/interest). The problem is that some companies dont pay any interest so that variables is not applicable to that company as dividing a number by zero doesnt make sense. Is there any way around this problem without removing the firms from the sample? could I put firms with no interest as with zero then create a dummy variable for whether a firm pays interest or not?
Thanks
Im having a problem with a variable. My sample is 400 companies and one of my explanotory variables is the interest coverage ratio (ic) which is the companies profit divided by the interest it pays (profit/interest). The problem is that some companies dont pay any interest so that variables is not applicable to that company as dividing a number by zero doesnt make sense. Is there any way around this problem without removing the firms from the sample? could I put firms with no interest as with zero then create a dummy variable for whether a firm pays interest or not?
Thanks