A Local Tire Dealer Wants to Predict the Number of Tires

question 170

Multiple Choice

A local tire dealer wants to predict the number of tires sold each month. The dealer believes that the number of tires sold is a linear function of the amount of money invested in advertising. The dealer randomly selects 6 months of data consisting of tire sales (in thousands of tires) and advertising expenditures (in thousands of dollars) . Based on the data set with 6 observations, the simple linear regression model yielded the following results.
$$\sum x$$ = 24 $$\sum X ^ { 2 }$$ =124 $$\sum Y$$ =42 $$\sum Y ^ { 2 }$$ =338 $$\sum X Y$$ =196
-What is the value of regression sum of squares,or the explained variation?

• A)24
• B)28
• C)44
• D)16
• E)6

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Definitions:

Acid-test Ratio

A strict measure used to assess if a company possesses sufficient current assets to pay off its short-term obligations without the need to liquidate its stock.

Times Interest

A metric that evaluates a firm's capability to handle its debt responsibilities using its present earnings.

Equity Multiplier

A financial ratio that measures a company's use of debt financing by comparing total assets to shareholders' equity.

Working Capital

The difference between a company's current assets and current liabilities, indicating the available short-term assets to cover short-term debts.