Intro to Data Analytics FINAL

Vocabulary flashcards covering key terms and definitions relevant to the lecture on data analytics.

Percentage Change Calculation in a horizontal analysis is:

(New - Old)/Old

Relevant base for accounts receivable would be what in vertical analysis

Total assets

Which bucket is expected the greatest amount of aged receivables to be?

1-30 days

What has a higher expected profit margin per dollar of sales than others

Jewelry

Which has a higher expected asset turnover per dollar of assets than others

Grocery stores

Relevant base for interest expense in vertical analysis is:

Sales revenue

Calculation for return on equity using Dupont Analysis

Profit margin × Asset turnover × Financial leverage

Ratio including a component to evaluate financial leverage

Return on equity

Measure that helps evaluate what happens in highest & lowest 10% of the data

Deciles

A _______ is a graphical depiction of a _____, reorganizing and summarizing certain data using cross-tabs without changing underlying data

Pivot chart, Pivot Table

What analytics go first addressing an accounting issue

Descriptive

Best measure for evaluating efficiency in handling/using assets is

Asset turnover

The older an A/R the ________ likely it will be that it will be collected

Less

Best way to analyze extreme values in a sample would be to consider the

Maximum or minimum

Best way to analyze variability in sample would be to consider the

Standard deviation

In Benford’s Law, what is expected for the percentage of time that the first digit of a number is 9?

4.58%

Example of cash reconciling item for an item recorded in the general ledger but not yet recorded in the bank statement

Outstanding checks

Example of cash reconciling item that can affect either bank statement or the general ledger

Error

What can find gaps in check numbers written

Sequence check

The film ‘Moneyball’ is an example of ________ analytics applied to baseball

Drill-down, detailed

Appropriate test comparing one sample to another to see if one if greater than the other is a:

Two-sample t-test of a difference in means

Appropriate test to check if independent variables are related to a dependent variable is a:

Regression

Helps find vendors that may have a similar address as an employee

Fuzzy matching

What will your fuzzy matching result yield if prompted to make tolerance = 100%

Only exact matches, no potential matches

Management accounting using variance analysis to explain what/why in cost of producing products by comparing expected/budgeted outcomes to actual outcomes. With this, what happens if the price of raw materials unexpectedly increases

Unfavorable price variance

What source would a company find the info regarding the salaries of female and male executives respectively?

Human resources system

From Benford’s Law, which first digit has a higher chance of occurrence than the first digit of 3

2

When is Benford’s Law not useful

For assets only recorded above a certain threshold

Analyzing the customer that owes the most would be an example of what diagnostic analysis

Drill-down detailed analytics

Which diagnostic analysis evalutes the relationship between sales and advertising expense

Determining relations / Patterns / Linkages between variables through statistical analysis

Which diagnostic analysis computes evaluating price and quantity variances

Identifying anomalies / outliers

Predictive analysis used to predict if a firm is likely to go bankrupt in the coming year

Classification

Predictive analysis used to predict interest rate given from a lender/bank to a borrower

Regression

A great amount of working capital or total assets leads to a company being ______ bankrupt

Less

If a company has an Altman Z-score of 2.8, what would the company be classified in?

The gray zone = risk of bankruptcy

__________ prefers _______ basis accounting since it is better at forecasting future performance

GAAP, accrual

What variable is more persistent in predicting the future income of said variable based on current income with he same variable

Operating income.

Persistence of __________ compared to _________ is consistent with GAAP, requiring the use of accrual accounting for financial reporting purposes

Operating income, cash flows from operating activities

predicting which companies are likely to be fraudulent or not or likely to be bankrupt or not is an example of

Classification

What are the two factors not used in Altman’s Z prediction analysis

Income and total assets

From Beneish, what factors are predictive of financial statement fraud

Decrease in depreciation expense

Predicting future operating income would be an example of which predictive analytics

Time series

Software that automates certain repeatable tasks is

Robotic Process Automation

Classification analysis to decide on client acceptance or rejection is most important for

Auditors

Not accounting for historical averages when prediciting possible future events is the

Base rate fallacy

Predictive analysis used to separate a sample or population into one or more groups/classes is

Classification.

Payment made all at once at one time is a

Lump-sum payment

Point where present value of cash inflows = present value of cash outflows

Internal rate of return

Analysis of future events performed by probability of those events and the potential outcomes is

Scenario analysis

Analysis performed to provide foresight by identifying patterns in historical data judging off likelihood or probability

Predictive

Evaluating outcomes based on uncertainty for the inputs is called

Sensitivity analysis

Decision to add an additional part-time or full-time employee is _______ analysis

Marginal

The objective of financial accounting is to assist present and potential investors and users in addressing the _______, _______, and _______ of prospective cash receipts

amounts, timing, uncertainty

Analysis deciding to outsource certain parts of producing a product or service

Make-or-buy

Decision of what big project to invest in is called

Capital budgeting

What would be the Excel formula to compute the internal rate of return for this stream of cash flows for a $32,000 investment and cash inflows of $10,000 per year for Years 1-4?

=IRR (-32000, 10000, 10000, 10000, 10000)

What would be the Excel formula to compute the net present value for this stream of cash flows for an initial $50,000 investment and cash inflows of $18,000 per year for Years 1-4 with a 10 percent cost of capital?

= NPV (0.1, -50000, 18000, 18000, 18000, 18000)

What is not a key input in decision making for make-or-buy analysis

Sales price of the product being manufactured

_______ = present value of cash inflows - present value of cash outflows

Net present value

With all things held equal, we choose the investment with the ______ accounting rate of return

Highest

All things held equal, we choose the investment with the _______ payback period

Fastest

Line charts should only be shown in _______ order to emphasize ______

Chronological, trend

Pie charts lend themselves well to _____ data because they show proportions

Categorical

Observations of values taken on by a variable at different points in time is

Time series data

Brief summaries/factoids of data sets that provide a representation of the dataset as a whole

Descriptive statistics

________ show vlaues of two variables each plotted on its own axis to exhibit potential

Scatter plots, correlation

Correlations, scatter plots, regression results, and time series analysis are generally associated with _______ analytics

Predictive

Diagnostic analytics include what type of visualizations

Box plots

Scatter plots mean more because they include a

Trend line

Outliers on box plots appear _______ of the max or min value within the expected range

Outside

Accounting figures and money are most likely to be shown as

Ratio Data

Descriptive analysis is part of which component in AMPS

Perform the analysis

Diagram showing relationships between two or more variables is a

Graph

Descriptive measures of financial statements evaluating liquidity, solvency, profitability, and efficiency is called

Ratio analysis

Which bucket is expected to hold the least amount of aged receivables

91-120 days

Outside of aging analysis establishing allowances for doubtful accounts, what system can be used to assess the ability of customers to pay outstanding receivables

Customer Relationship Management (CRM)

Profit margin of 0.0891, asset turnover of 0.4732, and financial leverage is 1.1957, what is return on equity?

0.0504

Relevant vase for COGS in vertical analysis is

Sales revenue

What would have a higher expected profit margin per dollar of sales than others

Real estate

Dupont Analysis measures which performance categories

Profitability, activity, and solvency

Which researchers provided examples on possible anomalies right around 0 requiring further analysis for descriptive analytics of a return on market equity

Burgstahler and Dichev (D&B)

Diagnostic analytics addresses which questions

Why did it happen

Diagnostic analysis includes all types of analysis except

Performing marginal analysis

What cash reconciling item can effect either the bank statement or general ledger

Recording error

In bank reconciliation, outstanding checks are recorded by the ______ but not yet by the _____

Company, bank

Management accounting using variance analysis to explain what/why in cost of producing products by comparing expected/budgeted outcomes to actual outcomes. With this, what happens if the usage of raw materials unexpectedly decreases below standard quantity used

Favorable quantity variance

Practice of bringing specific issues to the attention of management if they depart from expectation

Management by exception

From Benford’s Law, which one of the first digits have a lower probability of occurrence than the first digit “5”

9

Test that can find a transaction that is recorded twice

Test of duplicates

What is the independent variable in a regression analyzing the question if advertising expenses are related to sales revenue outcomes

Advertising expenses

Where would someone get data evaluating the customer with the highest dollar amount of orders in the past month

Customer relationship management system

Predictive and prescriptive analysis provide _______ deterministic output and ________ probabilistic models as compared to descriptive and diagnostic analytics

less, more

If a company has an Altman Z-score of 3.1, the company would be classified as

Safe zone, not currently at risk of bankruptcy

Predicting which companies are likely to have misstated financial statements is an example of _______ in predictive analytics

Classification

Apple computer was in the _____ zone in 1997, meaning they were or were at risk of bankruptcy

Gray

Which predictive analysis technique would be used to predict the interest rate given from a lender to a borrower

Regression

In regression analysis the relationship between two variables matters when you are trying to understand

How an independent variable impacts a dependent variable

When predictions place too little weight on the base rates of the past and instead uses different or new/recently received information, they commit the _________

Base rate fallacy

What is more persistent in predicting future amounts of the variable based on current amounts of that same variable?

Sales

The repeatability of the financial statement variables over time is

Persistence