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    Quantitative Reasoning for Business

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    ? Statistical Techniques in Business & Economics text:

    o Ch. 19, exercise 4
    Listed below is the net sales in $ million for Home Depot, Inc. and its subsidiaries from 1993 to 2002.

    Year Net Sales
    1993 9,239
    1994 12,477
    1995 15,470
    1996 19,535
    1997 24,156
    1998 30,219
    1999 38,434
    2000 45,738
    2001 53,553
    2002 58,247

    Determine the least squares equation. On the basis of this information, what are the estimated sales for 2005?

    o Ch. 19, exercise 20
    ? Listed below is the selling price for a share of PepsiCo, Inc. at the close of the year.

    Year Price Year Price Year Price
    1990 12.9135 1994 18.3160 1998 40.6111
    1991 16.8250 1995 27.7538 1999 35.0230
    1992 20.6125 1996 29.0581 2000 49.5625
    1993 20.3024 1997 36.0155 2001 48.6800
    2002 42.2200
    a. Plot the data.

    b. Determine the least squares trend equation.

    c. Calculate the points for the years 1993 and 1998

    d. Estimate the selling price in 2006. Does this seem like a reasonable estimate based on the historical data?

    e. By how much has the stock price increased or decreased (per year) on average during the period?

    ? Introduction to Management Accounting text:

    o Ch. 3, problem 3-41

    High-Low Method
    Manchester Foundry produced 45,000 tons of steel in March at a cost of £1,150,000. In April, the
    foundry produced 35,000 tons at a cost of £950,000. Using only these two data points, determine the
    cost function for Manchester

    ? Accounting: What the Numbers Mean text:

    o Ch. 3, case C3.18 (Along with Optional Continuation of Case 3.18)

    Analysis of liquidity and profitability measures of Gateway, Inc. (Check our website for future updates.) The following summarized data (amounts in thousands) are taken from the December 31, 1999, and 1998, comparative financial statements of Gateway, Inc., a direct marketer and distributor of personal computers (PCs) and PC-related products:

    (Amounts expressed in thousands) 1999 1998
    For the Year Ended December 31:
    Net sales $8,645,561 $7,467,925
    Cost of goods sold 6,745,744 5,921,651
    Operating income 595,670 494,227
    Net income $ 427,944 $ 346,399
    At December 31:
    Assets
    Cash and cash equivalents $1,127,654 $1,169,810
    Marketable securities 208,717 158,657
    Accounts receivable, net 646,339 558,851
    Inventory 191,870 167,924
    Other current assets 522,225 172,944
    Property, plant, and equipment, net 745,660 530,988
    Intangibles, net
    Other noncurrent assets 459,921 65,262
    Total assets $3,954,688 $2,890,380
    Liabilities and Owners' Equity
    Current maturities of long-term obligations $ 5,490 $ 11,415
    Accounts payable 898,436 718,071
    Accrued liabilities 609,132 415,265
    Accrued royalties 153,840 167,873
    Other current liabilities 142,812 117,050
    Long-term obligations, net of current maturities 2,998 3,360
    Warranty and other liabilities 124,862 112,971
    Common stock and additional paid-in capital 660,070 367,552
    Retained earnings 1,408,852 980,908
    Other stockholders' equity (51,804) (4,085)
    Total liabilities and stockholders' equity $3,954,688 $2,890,380

    At December 31, 1997, total assets were $2,039,271 and total stockholders' equity was $930,044.

    a. Calculate Gateway, Inc.'s working capital,
    current ratio, and acid-test ratio at December 31, 1999, and 1998.

    b. Calculate Gateway's ROE for the years ended December 31, 1999, and 1998.
    c. Calculate Gateway's ROI, showing margin and turnover, for the years ended December 31, 1999, and 1998.

    d. Evaluate the company's overall liquidity and profitability.

    e. Gateway, Inc., did not declare or pay any dividends during fiscal 1999 or fiscal 1998. What do you suppose is the primary reason for this?

    Optional continuation of Case 3.18-trend analysis.
    The following historical data were derived from Gateway, Inc.'s consolidated financial statements. (It should be noted that past data are not necessarily indicative of the results of future operations.)

    1995 1996 1997 1998 1999
    Net sales $3,676,328 $5,035,228 $6,293,680 $7,467,925 $8,645,561
    Net income 172,981 250,679 109,797 346,399 427,944
    Total assets 1,124,011 1,673,411 2,039,271 2,890,380 3,954,688
    Long-term obligations, net of current maturities 10,805 7,244 7,240 3,360 2,998
    a. Are the trends expressed in the above data generally consistent with each other?

    b. In your opinion, which of the above trends would be most meaningful to a potential investor in common stock of Gateway, Inc.? Which trend would be least meaningful?

    c. What other data (trend or otherwise) would you like to have access to prior to making an investment in Gateway, Inc.?

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    https://brainmass.com/business/strategy-and-business-analysis/quantitative-reasoning-for-business-260312

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    Solution Summary

    The question includes many problems on High-low method, trend analysis and linear regression.

    All of the problems are part of the Quantitative Reasoning for Business (QRB) of most undergraduate courses.

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