In: Statistics and Probability
Steve Douglas has been hired as a management trainee by a large brokerage firm. As his first project, he is asked to study the gross profit of firms in the chemical industry. What factors affect profitability in that industry? Steve selects a random sample of 16 firms and obtains data on the number of employees, number of consecutive common stock dividends paid, the total value of inventory at the start of the current year, the gross profit for each firm and foreign owner . His findings are as follows:
C o m p a n y |
Gross Profit ($000), y |
Number of Employees , x1 |
Consecutive Dividends, x2 |
Beginning Inventory ($000 ), x3 |
Foreign owner, x4 |
1 |
$2800 |
140 |
12 |
$1800 |
Yes |
2 |
1300 |
65 |
21 |
320 |
Yes |
3 |
1230 |
130 |
42 |
820 |
No |
4 |
1600 |
115 |
80 |
76 |
No |
5 |
4500 |
390 |
120 |
3600 |
Yes |
6 |
5700 |
670 |
64 |
8400 |
Yes |
7 |
3150 |
205 |
43 |
508 |
Yes |
8 |
640 |
40 |
14 |
870 |
Yes |
9 |
3400 |
480 |
88 |
5500 |
No |
10 |
6700 |
810 |
98 |
9875 |
No |
11 |
3700 |
120 |
44 |
6500 |
No |
12 |
6440 |
590 |
110 |
9130 |
No |
13 |
1280 |
440 |
38 |
1200 |
No |
14 |
4160 |
280 |
24 |
890 |
No |
15 |
3870 |
650 |
60 |
1200 |
Yes |
16 980 150 24 1300 No
C. Determine the regression equation. The Master Chemical Company employs 220 people, has paid 64 consecutive common stock dividends, has an inventory valued at $1 500 000 at the start of the year and foreign owner. What is the estimate of the gross profit?
D.Conduct a global test of hypothesis to determine whether any of the regression coefficients differ from zero. Test at a significance level of 0.05.
E. Conduct a test of hypothesis for the individual regression coefficients. Would you consider deleting any of the independent variables? Test at a significance level of 0.05.
F. If your conclusion in part (c) was to delete one or more independent variables, run the regression equation again, deleting those variables.
Provide step by step solution on excel.