Chapter 5 Assignment

If we wanted to know what level of sales would be needed to break even given the current economic environment, what type of analytics would we use?

Prescriptive analytics

If the critical value for a one-tailed t-test at the α = 0.05 level is 1.645, the t-statistic needed to reject the null hypothesis of no difference would be:

greater than 1.645.

What type of analytics would primarily use what-if analysis, scenario manager, and goal seek analysis?

Prescriptive analytics

What kind of analytics is generally used to forecast future sales, earnings, and cash flows from operating activities?

Time series

A ________blank t-test has more power than a ________blank t-test.

one-tailed; two-tailed

Which statistic tells us how many standard deviations (σ), a data point (or observation), x_i, is from its population mean, μ?

z-score

What kind of analytics is generally used to predict whether a company’s financial statements are fraudulent?

Classification

What type of analytics would primarily summarize facts and compute sums, averages, counts, etc.?

Descriptive analytics

Which distribution is a probability distribution where all outcomes are equally likely?

Uniform distribution

Which type of question does predictive analytics address?

Will it happen in the future?

Can we forecast future revenues/cash flows/earnings with reasonable accuracy?

Predictive Analytics

Should the company lease its headquarters building or buy it outright?

Prescriptive Analytics

How much did we pay in federal taxes over the past 5 years?

Descriptive Analytics

How did standard costs differ from actual costs for our product manufacturing?

Diagnostic Analytics

Will the company be profitable if its pharmaceutical product is approved by the FDA?

Prescriptive Analytics

How big is the difference between taxable income and net income?

Descriptive Analytics

Analytics Tools or Technique

Counts, totals, sums, minimums, maximums

Descriptive Analytics

Analytics Tools or Technique

Identifying anomalies/outliers

Diagnostic Analytics

Analytics Tools or Technique

Forecasts using time series analysis

Predictive Analytics

Analytics Tools or Technique

Goal-seek, sensitivity analysis

Prescriptive Analytics

Analytics Tools or Technique

Regression

Predictive Analytics

Analytics Tools or Technique

Benford’s law, sequence checks, identification of duplicate transactions

Diagnostic Analytics

Analytics Tool or Technique

Ratio analysis

Descriptive Analytics

Analytics Tool or Technique

Bank reconciliation

Diagnostic Analytics

Analytics Tool or Technique

Scenario analysis

Prescriptive Analytics

Analytics Tool or Technique

Pivot table analysis to find the most profitable product or customer

Descriptive Analytics

Analytics Tool or Technique

Classifying firms into those expected to have misstated their financial statements versus not misstated their financial statements

Predictive Analytics

Analytics Tool or Technique

Fuzzy matching of vendors and employees to see if there are similarities in names or addresses

Diagnostic Analytics

Analytics Tool or Technique

Optimization of product mix to maximize profits

Prescriptive Analytics

Analytics Tool or Technique

Variance analysis—why are prices or quantity used greater than budgeted

Diagnostic Analytics

To understand the probability of a difference in means between either two independent samples or a paired sample through time

t-tests

To understand if and the extent to which variables are related to each other

Correlation

To understand the relation between specific dependent variable values and independent variable inputs

Regression

To understand the basic statistics, including the mean, standard deviation, minimums, and maximums of a dataset

Descriptive Statistics

To understand the frequency of the data using a display of rectangles with area proportional to the underlying frequency of the data

Histogram