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    Regression Analysis - Random Sampling

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    A recent article in Buisness Week listed the best small companies. We are interested in the current results of the companies sales and earnings. A random sample of 12 companies was selected and the sales and earnings, in millions of dollars, are reported below.

    Company Sales Earnings
    ($ millions) ($ earnings)

    Papa John's International 89.2 4.9

    Applied Innovation 18.6 4.4

    Integracare 18.2 1.3

    Wall Data 71.7 8.0

    Davidson Associates 58.6 6.6

    Chico's Fas 46.8 4.1

    Company Sales Earnings
    ($ millions) ($ millions)

    Checkmate Electronics 17.5 2.6

    Royal Grip 11.9 1.7

    M-Wave 19.6 3.5

    Serving-N-Slide 51.2 8.2

    Daig 28.6 6.0

    Cobra Golf 69.2 12.8

    Let sales be the independent variable and earnings be the dependent variable.

    A. Draw a scatter diagragm.

    B. Compute the co-efficient of correlation.

    C. Compute the co-efficient of determination.

    D. Interpret your findings in part B and C.

    E. Determine the regression equation.

    F. for a small company with 50.0 million in sales, estimate the earnings.

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    Solution Summary

    A regression analysis is shown by random sampling of the data. The correlations between the data can be seen in the analysis as well as the scatter diagram provided in the solution. Interpretations of the results can also be found in the solution.