Mastering Statistics for Effective Management

PART 1

Enclosed in PPT.

PART 2

(1) Difference Between Descriptive and Inferential Data

There is big difference between descriptive and inferential data. The main purpose behind preparing descriptive statistics is that it gives an overview of the variables in terms of their average value and the way in which their values are fluctuating for a particular period of time. On other hand, inferential data reflect relationship between variables and impact that one has on another. It also assists in estimating the probability of a certain event happening if a specific situation appears (Trafimow and MacDonald, 2017).  Thus, it can be said that descriptive statistics give basic overview of the variable but inferential statistics help one in exploring ways in which two variables are connected to each other.

(2) Descriptive Statistics and Inferential Statistical Data Analysis

Mean refers to the average of the value of the variable. In the present case, it can be observed that the average value of the Netflix share price is 168.6, which means that the average share of Netflix is valued at 168.6. On the other hand, in the case of Amazon, the mean value of the share price is 928.9. This indicates that the share price is higher in the case of Amazon than Netflix. Median is another tool that is usually used by the analyst to make decisions. It is the tool that classifies entire data into two multiple parts equally. By comparing values above and below the mean value, variation in trend can be identified. In the case of Netflix, the median value is 123.6, and in the case of Amazon, the median value is 779.5.  Standard deviation is another important descriptive analysis tool that is commonly used by the analyst to analyse the variables. It can be observed that the standard deviation in the case of Netflix is 106.50 and the same in the case of Amazon is 517.23. Thus, it can be said that the Amazon share price is deviating at a higher rate than Netflix. Hence, the risk is higher in the case of Amazon than Netflix.

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In case of Netflix, it is expected that trend will be in line to current performance. Hence, it can be said that trend in share price seen currently will remain in future time period. On other hand, in case of Amazon also similar trend is observed.

H0: Return on Netflix shares is not affected by NASDAQ return percentage

H1: Return on Netflix shares is affected by NASDAQ return percentage

SUMMARY OUTPUT

ANOVA

Interpretation

multiple R value is 0.95, which reflect that there is strong correlation between variables. R square value is 0.92, which reflect that the model is efficiently explaining relationship between dependent and independent variables. value of level of significance is 1.6, which reflect that with change in index performance, any big variation is not observed in dependent variable value. Coefficient value: 0.08, which means that with small change in NASDAQ, a 0.08-point change is observed in Netflix share price. Null hypothesis accepted.

H0: Returns on Amazon shares are not affected by NASDAQ return percentage

H1: Returns on Amazon shares are affected by NASDAQ return percentage

Regression analysis (Amazon)

Summary output

ANOVA

Interpretation

multiple R value is 0.97, which reflect that there is strong correlation between variables. R square value is 0.94, which reflect that the model is efficiently explaining relationship between dependent and independent variables. value of level of significance is 1.9, which reflect that with change in index performance, any big variation is not observed in dependent variable value. Coefficient value 0.42, which means that with small change in NASDAQ, a 0.42-point change is observed in Amazon share price. Null hypothesis accepted.

Table 1: Correlation value

From the table given above, it can be observed that the correlation value in the case of Netflix is 0.95 with respect to revenue and net profit, which means that both are changing at the same rate. This also means that expenditures are made by Netflix as a specific percentage of sales, and due to this reason, revenue and net profit change at the same rate. The same thing is observed with respect to Amazon, as its correlation value is 0.97.

(3) Graphical Analysis of Data

Figure 3: Amazon net profit

Figure 4Netflix net profit

It can be seen from above table that profitability of both firms increases on yearly basis. important point to note is that this increase happened constantly, which reflect that Netflix and Amazon are performing better. higher jump in 2018 in net profit is observed in case of Amazon then Netflix. This indicate that both firms maintain strict control on expenditures in the business.

CONCLUSION

On basis of above discussion, it is concluded that there is significant importance of the statistics because, by using same firms, one can easily measure their business performance and make business decisions. There is huge difference between descriptive and inferential statistics but both have huge importance for the firms at their own place. Hence, it can be said that managers must use both methods to evaluate their performance.

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