what is the role of risk measurement in managing revenue risk

The value of a sports franchise is directly related to the amount of revenue that a franchise can generate. The accompanying data table gives the value and the annual revenue for 15 major sport teams. Suppose you want to develop a simple linear regression model to predict franchise value based on annual revenue generated. Complete parts​ (a) through​ (e) below.

a. Construct a scatter plot. (Already Answered)

b. Use the​ least-squares method to determine the regression coefficients

c. Interpret the meaning of b0 and b1 in this problem. Choose the correct answer below.

A.The​ Y-intercept, b0​, implies when the annual revenue is​ zero, the franchise value is b0​,in millions dollars. The​ slope,b1​,implies the revenue is equal b1​, in millions of dollars.

B.The​ Y-intercept,b0​,implies that if the annual revenue is​ zero, the franchise value is equal to the value of b0​,in millions of dollars. The​ slope,b1​,implies that the average franchise value is equal to b1​,in millions of dollars.

C.An interpretation of the​ Y-intercept,b0​,is not meaningful because no sports franchise is going to have a revenue of zero. The​ slope,b1​,implies that for each increase of 1 million dollars in annual​ revenue, the franchise value is expected to increase by b1​,in millions of dollars.

D.The​ Y-intercept,b0​,implies that if the annual revenue is​ zero, the franchise value is equal to b0​,in millions of dollars. The​ slope,b1​,implies that for each increase of 1 million dollars in annual​ revenue, the franchise value is expected to decrease by b1​,in millions of dollars.

d. Predict the mean franchise value​ (in millions of​ dollars) of a sports team that generates​$200 million of annual revenue.

Yi=$_______million ​(Round to the nearest integer as​ needed.)

e. What would you tell a group considering an investment in a major sports team about the relationship between revenue and the value of a​ team?

A.The value of the franchise is not affected by the changes in revenue.

B.The value of the franchise can be expected to decrease as revenue increases.

C.The value of the franchise can be expected to increase as revenue decreases.

D.The value of the franchise can be expected to increase as revenue increases.

Data Table

The value of a sports franchise is directly related to the amount of revenue that a franchise can generate.  The data below represents the value in 2017 ($ in millions) and the annual revenue ($ in millions) for the 30 Major League Baseball teams.

1. Using Excel or JMP, construct a scatterplot of value versus the revenue for the 30 MLB teams in 2016.  Provide a copy of the resulting scatterplot. (3 points)

2. Based upon your scatterplot, does it appear that the linear model is a reasonable approximation of the data? Comment on the direction and form of the relationship. (2 points)

3.  Using Minitab provide (or attach) the simple linear regression analysis for predicting a team’s value based upon its revenue. (2 points)

4. State the slope for the simple linear regression analysis and interpret this value in this context. (2 points)

5. State the y-intercept for the simple linear regression analysis and interpret, if applicable. (1 point)

6.  State the standard error of the regression analysis and interpret that value.  (2 points)

7. State the coefficient of determination and interpret the value in this context. (2 points)

8. State the sum of square errors. (1 point)

SSE=504849.5953

9. State the standard error of the slope. (1 point)

SEb(1)=sqrt(504849.5953/30-2)/sqrt(186742.7)=134.277/432.137=0.3107

Source: www.forbes.com

10. Calculate and interpret the 95% confidence interval for slope.   (2 points)

8.6507+-2.048(0.3107)=8.6507+-0.6363=(8.0144,

   We are 95% confident that the slope of the interval is between 8.0144 and 9.287.

11.  From the coefficient of determination, standard error of regression, and the confidence interval for slope does that model appear to fit well?  Explain.  (2 points)

What are the consequences associated with the new revenue recognition standard?

State What Kind of Fraud Is One of The Occurrence of Revenue?

how price discrimination can generate more revenue

The following account balances were included in the trial balance of Sarasota Corporation at June 30, 2020:

During 2020, Sarasota incurred production salary and wage costs of $698,300, consumed raw materials and other production supplies of $477,670, and had an increase in work-in-process and finished goods inventories of $114,200. The Retained Earnings account had a balance of $278,000 at June 30, 2020, before closing. There are 180,000 common shares outstanding. Assume Sarasota has elected to adopt IFRS. (Hint: Production payroll and materials costs reduced by the increase in ending work-in-process and finished goods inventories = the cost of goods sold.)

a.Prepare an income statement for the year ended June 30, 2020, using the multiple-step format and showing expenses by function. (List Selling Expenses before Administrative Expenses. Round per share answer to 2 decimal places, e.g. 52.74.)

b.Prepare the retained earnings portion of the statement of changes in equity for the year ended June 30, 2020. (List items that increase retained earnings first after adjusted balance.)

c.Prepare an income statement for the year ended June 30, 2020, using the single-step format and showing expenses by nature. (Round per share answer to 2 decimal places, e.g. 52.74.)

d.Assume the average market price of the common shares outstanding was $31.70. What was Sarasota’s price-earnings ratio? (Round answer to 1 decimal place, e.g. 52.5.)