Question

A recent article in Bloomberg Businessweek 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.

	Sales				Earnings						Sales				Earnings
Company	($ millions)				($ millions)				Company		($ millions)				($ millions)
Papa John’s International	$	97.5				5.3				Checkmate Electronics	$	18.7				2.7
Applied Innovation		18.7				4.6				Royal Grip		13.0				1.7
Integracare		18.4				1.4				M-Wave		20.2				3.6
Wall Data		74.5				8.2				Serving-N-Slide		54.4				9.0
Davidson & Associates		59.2				6.7				Daig		29.2				6.4
Chico’s FAS		49.7				4.5				Cobra Golf		72.3				13.9

1. Draw a scatter diagram.

1. On the graph below, use the point tool to plot the point corresponding to the first Sales and her Earnings (Sales 1).

2. Repeat the process for the remainder of the sample (Sales 2, Sales 3, … ).

3. To enter exact coordinates, double-click on the point and enter the exact coordinates of x and y. (already done)

Let sales be the independent variable and earnings be the dependent variable. (Do not round intermediate calculations. Round your answers to 3 decimal places.)

b. the coefficient of correlation

c. the regress equation, with the coefficients, is y= _________+_________x

d. for a small company with $50 million in sales, an estimate of the earnings is __________$ millions

Answer 1

b)Coefficient of correlation = 0.6477

c) Regression equation : Earnings = 8.0994 + 8.7753 * Sales

y = 8.0994 + 8.7753 * x

d) If sale = $ 50 millions then

Earning = 8.0994 + 8.7753 * 50

= 51.97621 $ millions PL??