Numbers File Edit Insert Table Organize Format Arrange View Share Window Help Assignmen #2_Data 5 O Tue Oct 15 1:59 AM Format Organize Format Organize Sheet eet Sheet Name ACTIVE VS FAILED RETAIL COMPANY Background 125% ▼ H |+ A M View Zoom Add Category Pivot Table Insert Table Chart Text Shape Media Comment Collaborate + DAILY RETURN WHEAT PRICES ACTIVE VS FAILED RETAIL COMPANY CREDIT_SCORE Company Group CashFlow 1 active -15.57 2 active 23.43 3 active 3.17 4 active -0.35 5 active -9.65 6 active 3.37 7 active 40.25 8 active 11.02 9 active 27.97 10 active 13.08 11 active -22.1 12 active 12.28 13 active -1.89 14 active 4.13 15 active -8.75 16 active 11.62 17 active -27.78 18 active -16.01 19 active 5.8 20 active -13.39 21 active 30 22 active 3.72 23 active -9.31 24 active -24.55 25 active 0.43 26 active 27.92 27 active -19.37 28 active -1.35 29 active 9.38 30 active 0.65 31 active 36.31 32 active -15.6 33 active 15.86 34 active 4.84 35 active -0.71 36 active 20.21 37 active 28.93 38 active 22.49 39 active 32.79 40 active 17.27 73 280 OCT 15 Ο

Excel output:

In what ways are companies that fail different from those that continue to do business? To answer this question, one study compared various characteristics of active and failed retail firms. One of the variables was the cash flow margin. Roughly speaking, this is a measure of how efficiently a company converts its sales dollars to cash and is a key profitability measure. The higher the percentage, the more profitable the company. 

The data for 40 companies is given in Excel under ACTIVE VERSUS FAILED RETAIL COMPANIES sheet.  

You will compare the mean cash flow margin for the two groups of firms using a significance test. The question of interest is whether the mean cash flow margin is different for the two groups. 

We assume that the population variances are equal and α = 0.01 for significance test.

a) Write out the null and alternative hypothesis associated with the research question. (Note:  is this a one or two tailed test?) 

b) What type of statistical test will you use to answer the proposed research question? (Note: Is this a z-test or a t-test?  

c) What critical value is associated with the 0.01 level of significance?  Be sure and include whether this critical value is a z or t value and, if appropriate, include the degrees of freedom associated with this statistical test.

d) What is the calculated value of the test statistic?  

e) What decision should be made regarding the null hypothesis? 

f. Provide a brief conclusion regarding your findings. Use your PowerPoint lecture slides for writing out the interpretation of your results. (5 p)