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Mastering Statistics for Effective Management

University: DAVID GAME COLLEGE

  • Unit No: 31
  • Level: High school
  • Pages: 9 / Words 2331
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 99
Organization Selected : Netflix and Amazon

INTRODUCTION

In recent times, statistical tools have been highly undertaken by managers for decision-making purposes. As statistical evaluation provides managers with appropriate information by evaluating data and thereby contributes to organizational success (Keller, 2015). The present report is based on the case scenario of Netflix and Amazon. This report will provide deeper insight about the concepts of descriptive and inferential data. Further, report will also shed light on trend pertaining to the share prices of selected firms through graphical presentation.

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

 

Netflix

Amazon

Mean

168.6

928.9

Mode

#N/A

#N/A

Median

123.6

779.5

SD

106.50

517.23

 

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.

Netflix

Data

Trend Netflix

Forecast Netflix

01-02-2019

358.1

 

01-03-2019

356.6

 

01-04-2019

377.3

364.0

01-05-2019

364.0

366.0

01-06-2019

366.0

369.1

01-07-2019

369.1

366.4

01-08-2019

366.4

367.1

01-09-2019

367.1

367.5

01-10-2019

367.5

367.0

01-11-2019

367.0

367.2

01-12-2019

367.2

367.3

01-01-2020

367.3

367.2

  

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Amazon

Data

Trend Amazon

Forecast Amazon

01-02-2019

1639.8

 

01-03-2019

1780.8

 

01-04-2019

1887.3

1769.3

01-05-2019

1769.3

1812.5

01-06-2019

1812.5

1823.0

01-07-2019

1823.0

1801.6

01-08-2019

1801.6

1812.4

01-09-2019

1812.4

1812.3

01-10-2019

1812.3

1808.8

01-11-2019

1808.8

1811.1

01-12-2019

1811.1

1810.7

01-01-2020

1810.7

1810.2

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

Regression Statistics

Multiple R

0.959235

R Square

0.920133

Adjusted R Square

0.918756

Standard Error

30.35722

Observations

60

ANOVA

 

df

SS

MS

F

Significance F

Regression

1

615791.1

615791.1

668.2046

1.6E-33

Residual

58

53450.53

921.5608

 

 

Total

59

669241.7

 

 

 

 

 

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept

-338.219

19.9931

-16.9168

4.26E-24

-378.239

-298.198

-378.239

-298.198

NASDAQ-IXIC

0.086711

0.003354

25.84965

1.6E-33

0.079996

0.093425

0.079996

0.093425

 

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

Regression Statistics

Multiple R

0.970305

R Square

0.941492

Adjusted R Square

0.940483

Standard Error

126.1845

Observations

60

 

ANOVA

 

df

SS

MS

F

Significance F

Regression

1

14860729

14860729

933.3144

1.91E-37

Residual

58

923506.9

15922.53

 

 

Total

59

15784236

 

 

 

 

 

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept

-1560.75

83.10446

-18.7806

2.5E-26

-1727.1

-1394.4

-1727.1

-1394.4

NASDAQ-IXIC

0.425967

0.013943

30.55019

1.91E-37

0.398057

0.453877

0.398057

0.453877

 

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

 

Correlation

Netflix

0.95

Amazon

0.97

 

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.

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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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