In a recent survey concerning company sales and net earnings. 15 companies responded with the following information.
|
Company
|
Sales
($ thousands)
|
Not Earnings
($ thousands)
|
|
OlgiCom
|
35.8 1
|
.1.0
|
|
Cola Company
|
73.5
|
-2.5
|
|
0oftouch Co.
|
48.1
|
-14
|
|
Southwest Consulting
|
38.0
|
-0.8
|
|
SouthCo
|
51.9
|
-12
|
|
JenCo
|
45.8 I
|
-1.4
|
|
Financial Services __
|
79.4
|
-4.1
|
|
Antique Accents
|
32.0
|
-1.4
|
|
Pace Design
|
529
|
-1.1
|
|
The Grayson Group
|
85.1
|
-2.1
|
|
Swan Furnace Cleaners
|
632
|
.2.9
|
|
SunEtlush Technologies
|
59.0
|
-12
|
|
JenStar
|
659
|
3.3
|
|
LText Tech
|
38.4
|
-0.9
|
|
PhotoFinish Co.
|
57.0
|
-20
|
a) Using your favorite statistical computing tools, find the coefficient of correlation for the data. For hill marks your answer should be accurate to at least three decimal places.
Note: For this question you can copy and paste the data into a spreadsheet application.
Coefficient of correlation: 0
b) Based on the coefficient of correlation. which of the following statements is most appropriate regarding the linear relationship between company sales and earnings?
The intervals for strong positive, moderate positive, weak positive, weak negative, moderate negative, and strong negative correlation all have the same length on the interval (-1,1).
- There is a strong positive relationship between sales and net earnings.
- There is a moderate positive relationship between sales and net earnings.
- There is a weak positive relationship between sales and net earnings.
- There is a weak negabve relationship between sales and net earnings.
- There is a moderate negabve retationship between sales and net earnings.
- There is a strong negabve relabonship between sales and net earnings.