The dependant variable is Y, which is Sales. The independant variable is X, whic
ID: 387071 • Letter: T
Question
The dependant variable is Y, which is Sales.
The independant variable is X, which is Advertising
Based on the above Excel printout, assess the strength of the relationship between Advertising and Sales. What conclusion can you draw? Based on the results, as a manager, willl you spend money to improve Sales? Identify R2, Significance of F and Regression Equation. Explain your answes clearly.
1 SUMMARY OUTPUT Regression Statistics 4 Multiple R 0.21818892 5 R Square 6 Adjusted R S-0.02565464 7 Standard Err 0.895142714 8 Observations 0.047606405 15 10 ANOVA df MS Significance F 12 Regression 13 Residual 14 Total 15 16 17 Intercept 18 Advertising -0.63190184 0.783887042-0.8061134 0.43467639-2.325386836 1.06158315-2.3253868 1.06158315 19 20 21 1 0.520687117 0.52068712 0.64981880.434676388 13 10.41664622 0.80128048 14 10.93733333 Coefficients Standard Error tStat 17.03415133 15.61674027 1.09076229 0.29518231 -16.70376486 50.7720675 -16.703765 50.7720675 P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% 23 24 25Explanation / Answer
The strength of the relationship between Advertising and Sales is explained by the value of multiple R which is the correlation coefficient. the value of multiple R is 0.218 which is very close to 0 which means no relationship at all.
R^2 is the coefficient of determination which tells how much percentage variation of y values around the mean are explained by x values. in this case it shows that only 4.76% of the variation of sales values around the mean are explained by the advertising values.
It can also be calculated as 1- residual sum of squares (SS Residual) / Total sum of squares (SS Total) which comes out to be 4.8%
Significance of F explain the significance associated with p value which is given to be 0.434676388
Regression equation: y=mx+b
Y= 17.03 – 0.63x
As there is no relation between advertising and sales so a manager would not spend money on advertising to improve sales.