A Random Sample of 79 Companies from the Forbes 500

question 63

Multiple Choice

A random sample of 79 companies from the Forbes 500 list (which actually consists of nearly 800 companies) was selected,and the relationship between sales (in hundreds of thousands of dollars) and profits (in hundreds of thousands of dollars) was investigated by regression.The following results were obtained from statistical software. Suppose the researchers conducting this study wish to estimate the profits (in hundreds of thousands of dollars) for companies that had sales (in hundreds of thousands of dollars) of 500.The following results were obtained from statistical software. If the researchers wish to estimate the profits for a particular company that had sales of 500,what would be a 95% prediction interval for the profits?

• A)(-1066.4,805.6)
• B)(-248.5,-12.3)
• C)-130.4 ± 59.3
• D)500 ± 59.3

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Definitions:

Inventory

The total amount of goods and materials held by a company for the purpose of resale or production.

Current Ratio

A financial ratio that gauges a firm's capacity to meet its short-term debts or obligations due within the next year.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets (cash, marketable securities, and receivables).

Working Capital

Current assets less current liabilities.