REGRESSION ANALYSIS

SUBMITTED BY: FARYAL RIZVI SUBMITTED TO: SIR AHSAN RIZVI COURSE TITLE: MANAGERIAL ECONOMICS CLASS: BBA 5 (B) REG. NO: 14298 PH: 03323166099 DATE OF SUBMISSION: 9th June, 2011 INSTITUTE: BAHRIA UNIVERSITY, KARACHI CAMPUS.

Multiple Regression
Regression models involve the following variables: The unknown parameters denoted as ; this may be a scalar or a vector. The independent variables X1 and X2.The dependent variable, Y. In various fields of application, different terminologies are used in place of dependent and independent variables. Given below the twenty observations of national refinery limited where; Y= earnings per share (EPS) X1= earnings after tax (EAT) X2= no of shares issued.

Years

EAT (X1)

Shares(X2) EPS (Y)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

318563000 227295000 290765000 352889000 -255057000 279045000 455826000 491822000 643308000 706707000 776000000 781000000 1352000000 1850000000 2121000000 3410000000 4203000000 6005000000 1533000000 2622521333

66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 66638800 79966600 79966600 79966600

4.78 3.41 4.36 5.30 -3.83 4.19 6.84 7.38 9.65 10.61 11.64 11.72 20.29 27.76 31.83 51.17 63.07 75.09 19.17 32.80

Variables Entered/Removed Variables Model 1 Entered x2, x1a Variables Removed

Method . Enter

a. All requested variables entered. b. Dependent Variable: y

Model Summary Adjusted R Model 1 R .997a R Square .994 Square .994 Std. Error of the Estimate 1.71660

a. Predictors: (Constant), x2, x1

ANOVA Model 1 Regression Residual Total a. Predictors: (Constant), x2, x1 b. Dependent Variable: y Sum of Squares 8627.398 50.094 8677.491 df

Mean Square 2 17 19 4313.699 2.947

F 1.464E3

Sig. .000
a

Coefficients

Standardized Unstandardized Coefficients Model 1 (Constant) x1 x2 a. Dependent Variable: y B 34.008 1.412E-8 -4.937E-7 Std. Error 6.367 .000 .000 1.053 -.113 Coefficients Beta t 5.341 48.186 -5.161 Sig. .000 .000 .000

Residuals Statistics Minimum Predicted Value Residual Std. Predicted Value Std. Residual a. Dependent Variable: y -2.4950 -4.23535 -1.049 -2.467 Maximum 79.3254 2.99545 2.791 1.745

Mean 19.8615 .00000 .000 .000

Std. Deviation 21.30900 1.62374 1.000 .946

N 20 20 20 20

Y= bo+b1x1+b2x2 Y= 34.008+1.412x1-4.937x2
Hypothesis: Ho: b1= 0 Ho: b2= 0 Ha: b1 0 Ha: b2 0

Calculation 1: Ttab value= 2.110 Tcalvalue = 48.186 The calculated value is greater than tabulated vale.so null hypothesis is rejected. Result is significant.

Calculation 2:

Tcal value= 2.110 Ttabvalue = -5.161

The calculated value is greater than tabulated value.so null hypothesis is rejected .the result is significant.

F -test:
F tab=3.59. F cal=0.001464 Therefore, the hypothesis is accepted, which is statistically insignificant.calculated value is less than tabulated value.

Fitness of Good Test:

R2= 0.994 and adjusted R2= 0.994 The value of R2 is very high which is equal to 0.994 which means the relationship between variables is very strong.

Summary:
In this report where EPS is dependent on EAT and no. of shares issued therefore it interprets that the x1 and x2 are significant and reject the hypothesis. The R2 is very high the f-test is also rejected and statistically significant .

REFERENCES
1. http://en.wikipedia.org/wiki/Regression_analysis 2. http://www.nrlpak.com/annual_reports.html 3. http://www.paksearch.com/Annual/Annual00/NRL00.htm 4. Managerial economics in a global economy (fifth edition) by Dominick Salvatore.