SCENARIO 12-11
a Computer Software Developer Would Like to Use

question 37

Short Answer

SCENARIO 12-11
A computer software developer would like to use the number of downloads (in thousands) for the trial version of his new shareware to predict the amount of revenue (in thousands of dollars) he can make on the full version of the new shareware.Following is the output from a simple linear regression
along with the residual plot and normal probability plot obtained from a data set of 30 different sharewares that he has developed:
$\begin{array}{lr}\hline {\text { Regression Statistics }} \\\hline \text { Multiple R } & 0.8691 \\ \text { R Square } & 0.7554 \\ \text { Adjusted R Square } & 0.7467 \\ \text { Standard Error } & 44.4765 \\ \text { Observations } & 30.0000 \\\hline\end{array}$

ANOVA
$\begin{array}{llll} \hline & {\text { df }} & {\text { SS }} &{\text { MS }} & F & \text { Significance F } \\\hline \text { Regression } & 1 & 171062.9193 & 171062.9193 & 86.4759 & 0.0000 \\ \text { Residual } & 28 & 55386.4309 & 1978.1582 & & \\ \text { Total } & 29 & 226451.3503 & & &\end{array}$

$\begin{array}{lllll}\hline & \text { Coefficients } & \text { Standard Error } & \text { t Stat } & \text { P-value } & \text { Lower 95\% } & \text { Upper 95\% } \\\hline \text { Intercept } & -95.0614 & 26.9183 & -3.5315 & 0.0015 & -150.2009 & -39.9218 \\\text { Download } & 3.7297 & 0.4011 & 9.2992 & 0.0000 & 2.9082 & 4.5513 \\\hline\end{array}$
Simple Linear Regression 12-41
-Referring to Scenario 12-11, which of the following is the correct alternative hypothesis for testing whether there is a linear relationship between revenue and the number of downloads? a) $H _ { 1 } : b _ { 1 } = 0$
b) $H _ { 1 } : b _ { 1 } \neq 0$
c) $H _ { 1 } : \beta _ { 1 } = 0$
d) $H _ { 1 } : \beta _ { 1 } \neq 0$

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Definitions:

Cash Turnover Ratio

A financial metric that measures how efficiently a company generates sales from its cash on hand.

Profit

The financial gain realized when the revenue from business operations and sales exceeds the expenses, taxes, and costs of producing and selling goods or services.

In-The-Black

A financial term indicating that a business is making a profit, as opposed to being "in the red" which means it is incurring losses.

Quick Ratio

A liquidity metric that indicates a company's capacity to pay its current liabilities without needing to sell inventory, calculated as (cash + marketable securities + accounts receivable) / current liabilities.