Objective:

The assignment is designed to reinforce the basic statistical concepts learned in the course. It is also meant to be a learning experience with handling of database with software (Excel) by putting the techniques learned in an applied setting.

Expectation:

The analysis is expected to resolve the assigned problem and prepare a report of results with clear interpretation.

in terms of the subject-matter concepts. It is also expected to show much thought, initiative and creativity, and to be well laid out, organized and well written.

Report Preparation:

Your report must be typed and should not exceed 10 pages (including plots, tables, appendices, etc.). The data set used in the study must not be included. It is preferable that the project is presented in the following format:

Description:

Your firm does a lot of contract work for a major corporation that faces an uncertain future, due in part to the sorry state of global economy. Both Parliament and the people have expressed a desire to limit expenditures and reallocate tight national resources toward economic and health care problems in the country.

You have been asked to prepare a report about the financial status of the corporation's contractors. As an initial look at this industry, you have collected 27 years of data on three firms that had contracts from 1982 through 2008. The data file contains financial characteristics of these firms that might shed some light on this industry.

Net profit margin measures the profitability of these firms. Research and development activities are probably important to profit, particularly in this type of industry, along with other strategic variables such as property, plant and equipment. The data set contractors.xls contains the following variables:

YEAR: years from 1982 through 2008.

FIRM: a firm indicator variable (1 for Firm 1; 2 for Firm 2; 3 for Firm 3).

PROFITS: Net Profit Margin: (in m $) divided by net sales (in m $) times 100.

RD: Research and Development expenditures as a percentage of net sales.

PPE: Property, Plant, and Equipment expenditures (as a percentage of net sales).

Based on the data set, construct appropriate tables and plots to make comparative assessments of the historical behavior of net profit margin in this industry over the 27-year period.

1. Prepare tables of descriptive statistics (mean, median, Quartiles, IQR, and Standard Deviation) by firm for net profit margin (PROFITS). Discuss.

2. Prepare the time plot for net profit margin (PROFITS) by firm. Do the time plots of PROFITS suggest that the trends in the 3 firms differ? Explain the trend patterns.

3. Prepare side by side box plots for net profit margin (PROFITS) by firm. Do the box plots of PROFITS suggest that the 3 firms differ in terms spread of the data and outlying profit values? Discuss.

4. Prepare scatterplot of PROFITS and RD, and the scatterplot of PROFIT and PPE. Use the scattergrams to describe the relationship between the variables of interest: PROFITS versus RD, and PROFITS versus PPE. Which of the two variables appear to be highly correlated to profitability? Discuss.