Introduction

Regression analysis is a statistical technique for studying linear

relationships. Typically, a regression analysis is done for one of two
purposes: In order to predict the value of the dependent variable for
individuals for whom some information concerning the explanatory
variables is available, or in order to estimate the effect of some
explanatory variable on the dependent variable. If we know the value
of several explanatory variables for an individual, but do not know the
value of that individuals dependent variable, we can use the
prediction equation to estimate the value of the dependent variable for
that individual. In order to see how much our prediction can be trusted,
we use the standard error of the prediction to construct confidence
intervals for the prediction.
So, regression analysis is known as the analysis which can depict and
predict the relationship between two variable and measure how much
they are related. The analysis involves different test with the variables.
The variables are basically divided in two parts i) independent and ii)
dependent. The whole analysis in this assignment will measure the
relationship and the fitness of the dependent variable on independent
variable.
As we have measured the relationship between investment and return
of listed companies of DSE, we have taken investment as the
independent variable and return as the dependent variable. So the
analysis here will include all the information of their fit and the
dependence.
We have taken 40 companies as the sample of the analysis in the
report. The data set consists of the financial information of the
companies of the year 2013. From the financial report the data has
been picked and assembled. Different industries and companies were
included to reduce biasness.

Data set of investment and return of different companies of

Bangladesh:

Data set
SL.no

Companies

Investme
nt (x)

Apex Foods Ltd

2
3
4
5
6

Rahima Food Corporation

AMCL Pran Ltd
Fu Wang Ltd
Fine Foods Ltd
Golden Harvest

7
8
9

National Tea Ltd

Olympic Foods Ltd
Saiham Textile mills Ltd.

10

Square Textiles Ltd.

11
12
13
14

Apex spinning & knitting mills

Ltd.
HR textile Ltd.
Desh Garments Ltd.
Paramount Textile Limited

175865300
0
134000000
567770121
999896891
76243000
353561456
9
33820000
89675000
1,186,193,6
05
160,783,76
0
84,360,738

15

FAMILYTEX (BD) LIMITED

16

Malek Spinning mills Ltd.

17
18

Metro Spinning Ltd.

Envoy Textile Ltd.

19

GPH Ispat Ltd.

20

DeshBandhu Polymar Ltd.

62,922,390
5,711,810
212,085,42
5
426,197,13
5
889,751,49
8
34,364,113
2,190,610,2
42
142,940,19
2
23,322,343

Return
(y)
14494000
6000000
54829900
7410063
613000
244547067
2956900
9549000
158,786,48
7
836,892,26
1
18,487,401
25,558,706
2,962,873
180,353,43
0
921,824,22
1
240,442,62
8
11,404,717
435,524,57
9
207,243,11
6
12,551,174

21

BSRM Steels Ltd.

22
23

Anwar Galvaniging Ltd.

Aftab Automobiles Ltd.

24

National Polymar Industries Ltd.

25

S. Alam Cold Rolled Steels Ltd.

26

Atlas Bangladesh Ltd.

27

Glaxo Smith Kaine

28

Beximco Pharmaceuticals Ltd.

29

Square Pharmaceuticals Ltd.

30

Orion Pharma Ltd.

910,922,71
3
3,393,909
356,056,62
0
214,940,61
5
321,052,10
0
2,988,646
140,713,00
0
3,098,815,0
15
4,129,371,8
69
1,552,473,6
48

1,401,589,
118
6,828,546
270,314,97
2
29,074,84
196,092,31
2
216,618,20
7
546,249,00
0
1,404,762,
780
4,106,630,
847
1,000,533,
572

Requirement:
1. Find the relation between sales & profit in terms of regression
model.
2. Test the hypothesis at 95% confidence interval.
3. Find the values of R2 and Adjusted R2.
4. Find the elasticity between the revenue and profit.
5. Prove TSS=RSS+ESS

Analysis
1. The regression analysis:
Variables Entered/Removedb

Model
1

Variables Entered
Investment (x)a

a. All requested variables entered.

b. Dependent Variable: Return (y)

Variables Removed

Method
. Enter

Coefficientsa
Standardized
Unstandardized Coefficients
Model
1

B
(Constant)

Std. Error

Beta

1.015E8

1.084E8

.473

.084

Investment (x)

Coefficients
t

.679

Sig.
.937

.355

5.627

.000

a. Dependent Variable: Return (y)

^
^
We know the regression equation is Y =

0+

Xi

Here our standardized coefficient Beta is 0.679, and constant 0 is

0.473
^
So our regression equation will be Y =0.473+0.679Xi

Comment: The estimated result shows that if the investment

increases by 1 Tk, the average level of return increases by 67.9 Tk.
Also, it is found that if the investment s zero the average return will be
47.3 Tk.

2. T-test:

One-Sample Statistics
N

Mean

Std. Deviation

Std. Error Mean

Investment (x)

40

7.39E8

1.049E9

1.658E8

Return (y)

39

4.58E8

7.382E8

1.182E8

One-Sample Test
Test Value = 0
95% Confidence Interval of the
Difference

Mean
t

df

Sig. (2-tailed)

Difference

Lower

Upper

Investment (x)

4.458

39

.000

7.393E8

4.04E8

1.07E9

Return (y)

3.873

38

.000

4.579E8

2.19E8

6.97E8

Critical value: At 5% significance level, with 38 degrees of freedom

the critical values of t test is 4.04 and 1.07

Comment: Since the value of return doesnt fall between these two
critical values, the null hypothesis will be rejected. The conclusion
thats why is, the impact of return on investment is significant.

3. R 2 and adjusted R2:

Model Summary
Std. Error of the
Model
1

R Square
.679a

.461

a. Predictors: (Constant), Investment (x)

Adjusted R Square
.447

Estimate
5.492E8

We have R2 =0.408, adjusted R2 =0.387 and standard error of the

estimate 5.348

Comment: From the estimated result it can be drawn that about

40.80% of the total variation in the dependent variable return is
explained by the fitted regression equation, and the remaining 59.20%
of the total variation in the dependent variable return is not explained
by the fitted regression equation, which can be attributed to the
factors included in the random error term. Finally it can be concluded
that the fit is not so good.
On the other hand the adjusted r2 proves that the value of r2 will not
increase with the changes in independent variable. The same
interpretation is also proved here is that the fit is not strong.

4. Elasticity between revenue and profit:

We know, Elasticity =
And, we have

^ X
Y

^
=0.679,

X = 739250134.3

Y = 446419510.6

So the required elasticity = 1.124392705

Comment: From the above calculation with the estimated data we find
that with the increase in investment by 100%, the return increases by
112%.

5. TSS=RSS+ ESS:
ANOVAb
Model
1

Sum of Squares

df

Mean Square

Regression

9.550E18

9.550E18

Residual

1.116E19

37

3.016E17

Total

2.071E19

38

a. Predictors: (Constant), Investment (x)

b. Dependent Variable: Return (y)

We have,
The regression sum of squares = 9.550 and
The residual sum of squares = 1.116,
So the total sum of squares will be
TSS= 9.550+1.116
= 10.666

F
31.661

Sig.
.000a

Conclusion: With all the analysis we have concluded that the

relationship of return in terms of investment is significantly high. The
changes in the investment surely impacts on the return. As we have
taken investment independent variable and return dependent variable,
the rate of change from the regression analysis shows little increase in
the investment increases 67.9% in return. In the significance level the
data dont fall in the critical area and the r2 implies that the fit of the
variables are not good.