A manager wanted to expand the operation of his firm. He was however wondering if the expansion will be profitable. The research department quickly sampled 232 firms and collected data on their profit levels measured with Return on Capital Employed (ROCE) in percentages, number of branches (X₁), age of firm in year (X2), education of manager in years (X3), and number of employees (X4). The results were estimated in STATA using linear regression model. Study the results carefully and answer the questions that follow. Dependent Variable: Profit Level (Y) Variable Number of branches Age of the firm in years Education of Manager Number of employees Constant Number of Observations R-squared Adjusted R-squared Coefficient Std. Error 0.34 0.65 1.56 1.15 3.91 232 0.5259 0.5175 F-statistic Prob(F-statistic) a) Write down the regression equation. 25.1123 0.0000 0.4812396 0.0664992 0.2199711 0.1416380 2.839479 t-Statistic Prob. 0.73 9.82 7.12 8.12 1.38 0.468 0.000 0.000 0.000 0.169 b) Identify the significant and insignificant variables at 5% (0.05) significance level. 3 c) Interpret the coefficients of the significant variables. d) Explain the R-Squared value. e) Explain the F-value and its overall significance to the regression output. f) Give two policy implications from the findings.
A manager wanted to expand the operation of his firm. He was however wondering if the expansion will be profitable. The research department quickly sampled 232 firms and collected data on their profit levels measured with Return on Capital Employed (ROCE) in percentages, number of branches (X₁), age of firm in year (X2), education of manager in years (X3), and number of employees (X4). The results were estimated in STATA using linear regression model. Study the results carefully and answer the questions that follow. Dependent Variable: Profit Level (Y) Variable Number of branches Age of the firm in years Education of Manager Number of employees Constant Number of Observations R-squared Adjusted R-squared Coefficient Std. Error 0.34 0.65 1.56 1.15 3.91 232 0.5259 0.5175 F-statistic Prob(F-statistic) a) Write down the regression equation. 25.1123 0.0000 0.4812396 0.0664992 0.2199711 0.1416380 2.839479 t-Statistic Prob. 0.73 9.82 7.12 8.12 1.38 0.468 0.000 0.000 0.000 0.169 b) Identify the significant and insignificant variables at 5% (0.05) significance level. 3 c) Interpret the coefficients of the significant variables. d) Explain the R-Squared value. e) Explain the F-value and its overall significance to the regression output. f) Give two policy implications from the findings.
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.6: Summarizing Categorical Data
Problem 23PPS
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Transcribed Image Text:QUESTION THREE
A manager wanted to expand the operation of his firm. He was however wondering if the
expansion will be profitable. The research department quickly sampled 232 firms and collected
data on their profit levels measured with Return on Capital Employed (ROCE) in percentages,
number of branches (X₁), age of firm in year (X2), education of manager in years (X3), and number
of employees (X4). The results were estimated in STATA using linear regression model. Study the
results carefully and answer the questions that follow.
Dependent Variable: Profit Level (Y)
Variable
Number of branches
Age of the firm in years
Education of Manager
Number of employees
Constant
Number of Observations
R-squared
Adjusted R-squared
Coefficient Std. Error
0.34
0.65
1.56
1.15
3.91
232
0.5259
0.5175
F-statistic
Prob(F-statistic)
a) Write down the regression equation.
25.1123
0.0000
0.4812396
0.0664992
0.2199711
0.1416380
2.839479
t-Statistic
0.73
9.82
7.12
8.12
1.38
Prob.
0.468
0.000
0.000
0.000
0.169
b) Identify the significant and insignificant variables at 5% (0.05) significance level. 3
c) Interpret the coefficients of the significant variables.
d) Explain the R-Squared value.
e) Explain the F-value and its overall significance to the regression output.
f) Give two policy implications from the findings.
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