Sales and profits A business analyst was interested in therelationship 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 regres-sion analysis and summary statistics shown. The assump-tions for regression inference appeared to be satisfied. T Profits SalesCount 79 79Mean 209.839 4178.29Variance 635,172 49,163,000Std Dev 796.977 7011.63 Dependent variable is: ProfitsR-squared = 66.2% s = 466.2Variable Coefficient SE(Coeff)Intercept -176.644 61.16Sales 0.092498 0.0075a) Is there a significant association between sales andprofits? Test an appropriate hypothesis and state yourconclusion in context.b) Do you think that a company’s sales serve as a usefulpredictor of its profits? Use the values of both R2and s in your explanation.
Correlation
Correlation defines a relationship between two independent variables. It tells the degree to which variables move in relation to each other. When two sets of data are related to each other, there is a correlation between them.
Linear Correlation
A correlation is used to determine the relationships between numerical and categorical variables. In other words, it is an indicator of how things are connected to one another. The correlation analysis is the study of how variables are related.
Regression Analysis
Regression analysis is a statistical method in which it estimates the relationship between a dependent variable and one or more independent variable. In simple terms dependent variable is called as outcome variable and independent variable is called as predictors. Regression analysis is one of the methods to find the trends in data. The independent variable used in Regression analysis is named Predictor variable. It offers data of an associated dependent variable regarding a particular outcome.
relationship between a company’s sales and its profits.
She collected data (in millions of dollars) from a random
sion analysis and summary statistics shown. The assump-
tions for regression inference appeared to be satisfied.
Count 79 79
Mean 209.839 4178.29
Variance 635,172 49,163,000
Std Dev 796.977 7011.63
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 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 R2
and s
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
