Q5 Sales and profits A business analyst was interested in the relationship between a company's sales and its profits. She collected data (in millions of dollars) from a random sample of Fortune 500 companies and created the regression analysis and summary statistics shown. The assumptions for regression inference appeared to be satisfied. Profits Sales Count 79 79 Mean 209.839 4178.29 Variance 635,172 49,163,000 Std Dev 796.977 7011.63 Dependent variable is Profits R-squared = 66.2% s= 466.2 Variable Coefficient SE(Coeff) Intercept -176.644 61.16 Sales 0.092498 0.0075 a) Is there a statistically significant association between sales and profits? Test an appropriate hypothesis and state your conclusion in context. b) Do you think that a company's sales serve as a useful predictor of its profits? Use the values of both R? and s in your explanation.

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Q5
Sales and profits A business analyst was interested in the relationship between a
company's sales and its profits. She collected data (in millions of dollars) from a random sample of
Fortune 500 companies and created the regression analysis and summary statistics shown. The
assumptions for regression inference appeared to be satisfied.
Profits
Sales
Count
79
79
Mean
209.839
4178.29
Variance
635,172
49,163,000
Std Dev
796.977
7011.63
Dependent variable is Profits
R-squared = 66.2%
s= 466.2
Variable
Coefficient
SE(Coeff)
Intercept
-176.644
61.16
Sales
0.092498
0.0075
a) Is there a statistically significant association between sales and profits? Test an appropriate
hypothesis and state your conclusion in context.
b) Do you think that a company's sales serve as a useful predictor of its profits? Use the values of
both R? and s in your explanation.
Transcribed Image Text:Q5 Sales and profits A business analyst was interested in the relationship between a company's sales and its profits. She collected data (in millions of dollars) from a random sample of Fortune 500 companies and created the regression analysis and summary statistics shown. The assumptions for regression inference appeared to be satisfied. Profits Sales Count 79 79 Mean 209.839 4178.29 Variance 635,172 49,163,000 Std Dev 796.977 7011.63 Dependent variable is Profits R-squared = 66.2% s= 466.2 Variable Coefficient SE(Coeff) Intercept -176.644 61.16 Sales 0.092498 0.0075 a) Is there a statistically significant association between sales and profits? Test an appropriate hypothesis and state your conclusion in context. b) Do you think that a company's sales serve as a useful predictor of its profits? Use the values of both R? and s in your explanation.
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