Use the Financial database from “Excel Databases.xls” on Blackboard. Use Total Revenues, Total Assets, Return on Equity, Earnings Per Share, Average Yield, and Dividends Per Share to predict the average P/E ratio for a company. Use Excel to perform a forward selection regression analysis. Assume a 5% level of significan
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.
Use the Financial database from “Excel Databases.xls” on Blackboard. Use Total Revenues, Total Assets, Return on Equity, Earnings Per Share, Average Yield, and Dividends Per Share to predict the average P/E ratio for a company. Use Excel to perform a forward selection
Company | Type | Total Revenues | Total Assets | Return on Equity | Earnings per Share | Average Yield | Dividends per Share | Average P/E Ratio |
AFLAC | 6 | 7251 | 29454 | 17.1 | 2.08 | 0.9 | 0.22 | 11.5 |
Albertson's | 4 | 14690 | 5219 | 21.4 | 2.08 | 1.6 | 0.63 | 19 |
Allstate | 6 | 20106 | 80918 | 20.1 | 3.56 | 1 | 0.36 | 10.6 |
Amerada Hess | 7 | 8340 | 7935 | 0.2 | 0.08 | 1.1 | 0.6 | 698.3 |
American General | 6 | 3362 | 80620 | 7.1 | 2.19 | 3 | 1.4 | 21.2 |
American Stores | 4 | 19139 | 8536 | 12.2 | 1.01 | 1.4 | 0.34 | 23.5 |
Amoco | 7 | 36287 | 32489 | 16.7 | 2.76 | 3.1 | 1.4 | 16.1 |
Arco Chemical | 2 | 3995 | 4116 | 6.2 | 1.14 | 6.1 | 2.8 | 40.4 |
Ashland | 7 | 14319 | 7777 | 9.5 | 3.8 | 2.3 | 1.1 | 12.4 |
Atlantic Richfield | 7 | 19272 | 25322 | 21.8 | 5.41 | 3.8 | 2.83 | 3.8 |
Bausch & Lomb | 5 | 1916 | 2773 | 6 | 0.89 | 2.6 | 1.04 | 2.6 |
Baxter International | 5 | 6138 | 8707 | 11.5 | 1.06 | 2.3 | 1.13 | 47.2 |
Bristol-Myers Squibb | 5 | 16701 | 14977 | 44.4 | 3.14 | 2 | 1.52 | 24.1 |
Burlington Coat | 1 | 1777 | 775 | 12.3 | 1.18 | 0.1 | 0.02 | 12.9 |
Central Maine Power | 3 | 954 | 2299 | 2.4 | 0.16 | 7.8 | 0.9 | 79.6 |
Chevron | 7 | 41950 | 35473 | 18.6 | 4.95 | 3 | 2.28 | 15.2 |
CIGNA | 6 | 14935 | 108199 | 13.7 | 4.88 | 2 | 1.1 | 11.4 |
Cinergy | 3 | 4353 | 8858 | 13.3 | 1.59 | 5.1 | 1.8 | 22.4 |
Dayton Hudson | 1 | 27757 | 14191 | 18 | 1.7 | 1.2 | 0.33 | 16.2 |
Dillard's | 1 | 6817 | 5592 | 9.2 | 2.31 | 0.4 | 0.16 | 15.7 |
Dominion Resources | 3 | 7678 | 20193 | 7.9 | 2.15 | 6.8 | 2.58 | 17.7 |
Dow Chemical | 2 | 20018 | 24040 | 23.6 | 7.7 | 3.6 | 3.24 | 11.6 |
DPL | 3 | 1356 | 3585 | 13.9 | 1.2 | 5.3 | 0.91 | 14.3 |
E. I. DuPont DeNemours | 2 | 46653 | 42942 | 21.3 | 2.08 | 2.1 | 1.23 | 27.9 |
Eastman Chemical | 2 | 4678 | 5778 | 16.3 | 3.63 | 3 | 1.76 | 16 |
Edison International | 3 | 9235 | 25101 | 12.3 | 1.73 | 4.2 | 1 | 13.6 |
Engelhard | 2 | 3631 | 2586 | 6.1 | 0.33 | 1.9 | 0.38 | 61.8 |
Entergy | 3 | 9562 | 27001 | 4.2 | 1.03 | 6.9 | 1.8 | 25.4 |
Equitable | 6 | 9666 | 151438 | 12.3 | 2.86 | 0.5 | 0.2 | 13.4 |
Ethyl | 7 | 1064 | 1067 | 53.6 | 0.71 | 5.6 | 0.5 | 12.6 |
Exxon | 7 | 137242 | 96064 | 19.4 | 3.37 | 2.8 | 1.63 | 17.1 |
FPL Group | 3 | 6369 | 12449 | 12.2 | 3.57 | 3.7 | 1.92 | 14.4 |
The GAP | 1 | 6508 | 3338 | 33.7 | 1.3 | 0.7 | 0.2 | 22 |
Georgia Gulf | 2 | 966 | 613 | 228 | 2.39 | 1.1 | 0.32 | 11.8 |
GIANT Food | 4 | 4231 | 1522 | 7.9 | 1.18 | 2.4 | 0.78 | 26.9 |
A & P | 4 | 10262 | 2995 | 6.9 | 1.66 | 1.2 | 0.35 | 17.8 |
Great Lakes Chemicals | 2 | 1311 | 2270 | 5.5 | 1.19 | 1.3 | 0.62 | 40.5 |
Green Mountain Power Company | 3 | 179 | 326 | 8.3 | 1.57 | 7.3 | 1.61 | 14 |
Hannaford Bros. | 4 | 3226 | 1227 | 9.9 | 1.4 | 1.5 | 0.54 | 26.6 |
Hercules | 2 | 1866 | 2411 | 47 | 3.18 | 2.2 | 1 | 14.5 |
Houston Industries | 3 | 6873 | 18415 | 8 | 1.66 | 6.6 | 1.5 | 13.7 |
Jefferson-Pilot | 6 | 2578 | 23131 | 14.5 | 3.47 | 2.3 | 1.04 | 13.3 |
Johnson & Johnson | 5 | 22629 | 21453 | 26.7 | 2.41 | 1.5 | 0.85 | 24.1 |
Liberty | 6 | 660 | 3185 | 11.1 | 3.34 | 1.8 | 0.77 | 12.7 |
The Limited | 1 | 9189 | 4301 | 10.6 | 0.79 | 2.3 | 0.48 | 26.7 |
Lincoln National | 6 | 4899 | 77175 | 0.4 | 0.21 | 3.1 | 1.96 | 300.2 |
Lubrizol | 2 | 1674 | 1462 | 19 | 2.66 | 2.6 | 1.01 | 14.5 |
Lyondell Petrochemical | 7 | 3010 | 1559 | 46.2 | 3.58 | 3.9 | 0.9 | 6.4 |
Mallinkrodt | 5 | 1868 | 2988 | 14.8 | 2.47 | 1.7 | 0.66 | 16 |
May Department Stores | 1 | 12685 | 9930 | 20.5 | 3.11 | 2.4 | 1.2 | 16.2 |
McKesson | 5 | 20857 | 5608 | 11 | 1.59 | 1.2 | 0.5 | 26 |
Mercantile Stores | 1 | 3144 | 2178 | 7.9 | 3.53 | 2.1 | 1.19 | 16.3 |
Merck | 5 | 23637 | 25812 | 36.6 | 3.74 | 1.7 | 1.69 | 26.6 |
Millennium Chemicals | 2 | 3048 | 4326 | 12.6 | 2.47 | 2.9 | 0.6 | 8.3 |
Mobil | 7 | 65906 | 43559 | 16.8 | 4.01 | 3.1 | 2.12 | 17.2 |
Monsanto | 2 | 7514 | 10774 | 7.2 | 0.48 | 1.1 | 0.5 | 90.7 |
Morton | 2 | 2388 | 2805 | 12.3 | 1.48 | 1 | 0.36 | 25.2 |
Murphy Oil | 7 | 2138 | 2238 | 12.3 | 2.94 | 2.6 | 1.35 | 18 |
Mylan Laboratories | 5 | 555 | 848 | 13.5 | 0.82 | 0.9 | 0.16 | 22.4 |
NALCO Chemical | 2 | 1434 | 1441 | 25 | 2.1 | 2.6 | 1 | 18.3 |
Nevada Power | 3 | 799 | 2339 | 10.1 | 1.65 | 6.8 | 1.6 | 14.2 |
NIPSCO | 3 | 2587 | 4937 | 14.1 | 1.53 | 4.1 | 0.9 | 14.4 |
Olin | 2 | 2410 | 1946 | 17.4 | 3 | 2.8 | 1.2 | 14.5 |
Orion Capital | 6 | 1591 | 3884 | 16 | 4.15 | 1.5 | 0.6 | 9.8 |
Owens & Minor | 5 | 3117 | 713 | 9.4 | 0.6 | 1.4 | 0.18 | 21.7 |
Pacific Corporation | 3 | 6278 | 13880 | 5.2 | 0.68 | 4.6 | 1.08 | 34.2 |
J. C. Penney | 1 | 30546 | 23493 | 7.7 | 2.1 | 3.8 | 2.13 | 26.9 |
Pennzoil | 7 | 2654 | 4406 | 15.8 | 3.76 | 1.6 | 1 | 17.1 |
Pfizer | 5 | 12504 | 15336 | 27.9 | 1.7 | 1.1 | 0.68 | 35.4 |
Pharmacia & Upjohn | 5 | 6710 | 10380 | 5.8 | 0.61 | 3.1 | 1.08 | 56.2 |
Phillips Petroleum | 7 | 15424 | 13860 | 19.9 | 3.61 | 3 | 1.34 | 12.4 |
Poe & Brown | 6 | 129 | 194 | 25.1 | 1.48 | 1.5 | 0.35 | 16.3 |
PPG | 2 | 7379 | 6868 | 28.5 | 3.94 | 2.3 | 1.33 | 14.7 |
PP&L Resources | 3 | 3049 | 9485 | 11.4 | 1.8 | 7.7 | 1.67 | 12 |
Progressive | 6 | 4190 | 7560 | 18.7 | 5.31 | 0.3 | 0.24 | 17 |
Rohm & Haas | 2 | 3999 | 3900 | 19.8 | 2.13 | 2.2 | 0.63 | 13.4 |
Ruddick | 4 | 2300 | 885 | 12.5 | 1.02 | 1.8 | 0.32 | 17 |
Schering-Plough | 5 | 6778 | 6507 | 51.2 | 1.95 | 1.5 | 0.74 | 24.6 |
Sears, Roebuck | 1 | 41296 | 38700 | 20.3 | 2.99 | 1.8 | 0.92 | 17.4 |
Stryker | 5 | 980 | 985 | 20.5 | 1.28 | 0.3 | 0.11 | 27.2 |
Sun | 7 | 10531 | 4667 | 18 | 2.7 | 2.8 | 1 | 13 |
Sunamerica | 6 | 2114 | 35637 | 14.7 | 1.8 | 0.9 | 0.3 | 19.5 |
Texaco | 7 | 46667 | 29600 | 20.9 | 4.87 | 3.1 | 1.75 | 11.5 |
The TJX Companies | 1 | 7389 | 2610 | 26.3 | 1.75 | 0.6 | 0.09 | 8.2 |
Torchmark | 6 | 2283 | 10967 | 17.5 | 2.39 | 1.7 | 0.59 | 14.2 |
Tosco | 7 | 13282 | 5975 | 10.9 | 1.37 | 0.8 | 0.24 | 23 |
Travelers | 6 | 37609 | 386555 | 14.9 | 2.54 | 0.9 | 0.4 | 17 |
Ultramar Diamond Shamrock | 7 | 10882 | 5595 | 9.5 | 1.94 | 3.5 | 1.1 | 16.1 |
Union Carbide | 2 | 6502 | 6964 | 28.8 | 4.53 | 1.6 | 0.79 | 10.7 |
United States Surgical Corporation | 5 | 1172 | 1726 | 7.5 | 1.21 | 0.5 | 0.16 | 29 |
UNOCAL | 7 | 6064 | 7530 | 28.9 | 2.65 | 2 | 0.8 | 15.5 |
UNUM | 6 | 4077 | 13200 | 15.2 | 2.59 | 1.3 | 0.56 | 17 |
USX-Marathon | 7 | 15754 | 10565 | 12.6 | 1.58 | 2.4 | 0.76 | 19.8 |
Valero Energy | 7 | 5756 | 2493 | 9.6 | 2.03 | 1.2 | 0.42 | 17.2 |
Warner-Lambert | 5 | 8180 | 8031 | 30.7 | 1.04 | 1.4 | 0.51 | 35.7 |
WEIS Markets | 4 | 1819 | 972 | 9.2 | 1.87 | 3 | 0.94 | 16.9 |
Wellman | 2 | 1083 | 1319 | 4.8 | 0.97 | 1.8 | 0.35 | 20.5 |
Winn-Dixie Stores | 4 | 13219 | 2921 | 15.3 | 1.36 | 2.7 | 0.98 | 27.2 |
WITCO | 2 | 2187 | 2298 | 14 | 1.55 | 2.9 | 1.12 | 24.9 |
Zenith Nation Insurance | 6 | 601 | 1252 | 7.8 | 1.57 | 3.7 | 1 | 17 |
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