ACCA – APPLIED KNOWLEDGE

MANAGEMENT ACCOUNTING

BISC TRAINING CENTER

Ms. Nguyen Thi Phuong Thao, ACCA
www.bisc.edu.vn
085 8822 168
training@bisc.edu.vn

Chapter 5
SUMMARISING
AND ANALYSING
DATA

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 0. CHAPTER 5 – MAIN PARTS
Summarising and analysing data

Big data Grouped and ungrouped data Averages

The characteristics of big data Frequency diagrams Arithmetic mean

The use of big data Mode

Median

Dispersion Expected values Normal distribution

Standard deviation Limitations of Graphing the normal distribution

expected values
Coeficient of variation Properties of the normal distribution

Interpreting normal distribution

graphs and tables

1. BIG DATA
Big data: Big data refers to the mass of data that society creates each
year, extending far beyond the traditional financial and enterprise data
created by companies. Sources of big data include social networking sites,
internet search engines, and mobile devices.

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 1. BIG DATA
The characteristics of big data

The scale of information which can now be created and stored is

staggering. Advances in data storage technology as well as fall in
Volume
price of this storage has allowed for the captured data to be stored
for further analysis.
The speed at which ‘real time’ data is being streamed into the
Velocity organisation. Timeliness is a key factor in the usefulness of financial
information to decision makers.
Modern data takes many differenct forms. Processing these sources
Variety to the form of structured data may require significant investment in
people and IT.
Value refers to its usefulness to the business. Collecting big data
Value alone is of no use but the insights gained can inform decisions and
add ‘value’ to a business.
This refers to truthfulness. Although the volume of data available to
Veracity organisations is greater than ever before, for that data to be
benificial for decision making it needs to be reliable and truthful.
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1. BIG DATA
Big data can be???
• Structured data: is data contained within a field or a data record,
making it easy to analyse. It is in a standardlised format or resides
in a specified location in a document. It is easy to analyse, store and
search

• Semi-structured data: is data that doesn’t reside in a fixed field but

does contain some properties that allow it to be analysed and
organised to some extent.

• Unstructured data: is data not easily contained within structured

data fields. It is difficult to analyse, manage and search.

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 1. BIG DATA
The uses of big data
• Data analytics: Data analytics is the process of collecting and
examining data in order to extract meaningful business insights,
which can be used to inform decision-making and improve
performance.
• Descriptive analysis/analytics: Descriptive analysis summarises or
describes what the data shows.
• Inferential analysis: Inferential analysis makes predictions about a
population based on a sample.

1. BIG DATA
The uses of big data
• Business value is measured in many ways, such as profit, shareholder
value, brand value and intellectual value. Big data can be used to
analyse opportunities to increase revenue and reduce costs, thereby
increasing profit.
• Coporate Strategy:To be successful, big data must fit into the
organisation's overall aims and objectives. Big data is a key source of
innovation, helping to create new products and services 
contribute to an improvement in the organisation’s competitive
advantage.

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 1. BIG DATA
The uses of big data
The key effects of big data on decisions can be summarised as follows:
• Decisions can be made quickly
• Businesses can respond earlier to environmental changes and be more
flexible in their response.
• Decisions can be based on current situations, but also have an element
of taking potential future situations into account.
• Decisions are made on hard data evidence that can be quantified
• Decisions can be made on a collaborative basis because data is easily
shared and converted from one form into another
• ‘Outside the box’ decisions are more likely because all factors are taken
into account, not just the ones managers think of

2. GROUPED AND UNGROUPED DATA

Grouped data: Grouped data is where the frequency is shown in terms of

a range (for example 0-100 units, 101 to 200 units and so on)
Ungrouped data: Ungrouped data is where the frequency is shown in
terms of a specific measure/value

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 2. GROUPED AND UNGROUPED DATA
Frequency diagrams

Frequency diagrams are used if values of particular variables occur more

than once.

Output (units) Number of employees (frequency)

65 1
66 0
67 2
68 2
69 4
70 5

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2. GROUPED AND UNGROUPED DATA

Frequency diagrams

Grouped frequence distributions

For example, the output produced by another group of 20 employees
during one week was as follows, in units.
1,087 850 1,084 792 Output (units) Number of employees
(frequency)
924 1,226 1,012 1,205
700-799 1
1,265 1,028 1,230 1,182
800-899 1
1,086 1,130 989 1,155 900-999 2
1,134 1,166 1,129 1,160 1,000-1,099 5
1,100-1,199 7
1,200-1,299 4
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That once items have been ‘grouped’ in this way, their individual values
are lost.

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 2. GROUPED AND UNGROUPED DATA
Frequency diagrams

Cumulative frequency distributions

A cumulative frequency distribution (or cumulative frequency table) can be
used to show the total number of times that a value above or below a
certain amount occurs.

Cumulative Cumulative
frequency frequency
≥ 700 20 < 800 1
≥ 800 19 < 900 2
≥ 900 18 < 1,000 4
≥ 1,000 16 < 1,100 9
≥ 1,100 11 < 1,200 16
≥ 1,200 4 < 1,300 20

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3. AVERAGES
Arithmetic mean
Arithmetic mean: The arithmetic mean is calculated by adding all the
observations and dividing by the number of observations. The arithmetic
mean of a variable x is shown as 𝑥̅ (x bar)
Ungrouped data: Grouped data:
∑𝑥 ∑ 𝑓𝑥
𝑥̅ = 𝑥̅ =
𝑛 𝑓

where x = value and f = frequency

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 3. AVERAGES
Some details from a frequency distribution of time taken in seconds to
produce a particular product are given:
Time taken
f fx f𝒙𝟐
(mid-point)
107.5 2 215.00 23,112.50
112.5 5 562.50 63,281.25
117.5 4 470.00 55,225.00
122.5 8 980.00 120,050.00
127.5 10 1,275.00 162,562.50
132.5 5 662.50 87,781.25
137.5 4 550.00 75,625.00
142.5 2 285.00 40,612.50

What is the mean of this frequency distribution?

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3. AVERAGES
Answer:
Time taken
f fx f𝒙𝟐
(mid-point)
107.5 2 215.00 23,112.50
112.5 5 562.50 63,281.25
117.5 4 470.00 55,225.00
122.5 8 980.00 120,050.00
127.5 10 1,275.00 162,562.50
132.5 5 662.50 87,781.25
137.5 4 550.00 75,625.00
142.5 2 285.00 40,612.50
40 5,000.00 628,250.00

Mean = ∑ 𝒇𝒙 ÷ ∑ 𝒇 = 5000 ÷ 40 = 125 seconds

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 3. AVERAGES
Arithmetic mean

 Advantages
 Used most frequently
 Most commonly understood
 Uses all data
• Disadvantages
 May not be a value in the distribution
 Distorted by extreme high/low values
 Ignores dispersion (spread)

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3. AVERAGES
Mode
Mode: The mode or modal value is the most frequently occurring value.

 Advantages
 Most popular item
 Not distorted by high/low values
 Corresponds to an actual value in the distribution
 Disadvantages
 Ignores dispersion
 Does not take into account all data

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 3. AVERAGES
Mode
Example:
A group of shoppers were interviewed and asked how many loaves of bread they
would need to buy from the bakers over a one-week period. The results are as
follows:
Number of loaves Number of shoppers
0 2
1 22
2 32
3 2
4 34
5 6
6 12

What is the mode of the number of loaves needed per shopper in a one-week
period?
Answer: 4 loaves. The mode is the most frequently occurring number of loaves
required by a shopper. 19

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3. AVERAGES
Median
Median: The median is the value of the middle member of an array. The
middle item of an odd number of items is calculated as the (n+1)th/2 item.
(a) Ungrouped data (odd number)
(i) Arrange data in order
(ii) Calculate middle (median) rank – (n+1)/2 = nth item in the list
(iii) Median value = the entry corresponding to the median rank
(b) Ungrouped data (even number)
(i) Arrange the data in order
(ii) Calculate the MEAN of the two median ranks

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 3. AVERAGES
Median

 Advantages

 Not distorted by high/low values

 Corresponds to an actual value in the distribution

 Disadvantages

 Ignores dispersion

 Limited use

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3. AVERAGES
Activity: Median
The following times taken to produce a batch of 100 units of Product X
have been recorded:
21 mins 17 mins 24 mins 11 mins 37 mins 27 mins
20 mins 15 mins 17 mins 23 mins 29 mins 30 mins
24 mins 18 mins 17 mins 21 mins 24 mins 20 mins

What is the median time?

Answer: 21 mins
11, 15, 17, 17, 17, 18, 20, 20, 21, 21, 23, 24, 24, 24, 27, 29, 30, 37
There are 18 items which is an even number, therefore the median is the
arithmetic mean of the two middle items

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 4. DISPERSION
Standard deviation 𝝈: Standard deviation 𝜎 is one the most important
measures of dispersion (spread of data). The standard measures the
spread of data around the mean
Variance 𝝈𝟐 : The variance is the square of the standard deviation
(variance = 𝜎 )

Standard deviation for ∑(𝒙 𝒙)𝟐 ∑ 𝒙𝟐

ungrouped data: 𝜎= = − 𝒙𝟐
𝒏 𝒏

Standard deviation for ∑ 𝒇𝒙𝟐 ∑ 𝒇𝒙 ∑ 𝒇𝒙𝟐

grouped data: 𝜎= ∑𝒇
− ( ∑ )𝟐 = ∑𝒇
− 𝒙𝟐
𝒇

𝜎 = standard deviation
x = value
𝒙 = mean
f = frequency
n = ∑𝒇
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4. DISPERSION
Some details from a frequency distribution of time taken in seconds to
produce a particular product are given:
Time taken
f fx f𝒙𝟐
(mid-point)
107.5 2 215.00 23,112.50
112.5 5 562.50 63,281.25
117.5 4 470.00 55,225.00
122.5 8 980.00 120,050.00
127.5 10 1,275.00 162,562.50
132.5 5 662.50 87,781.25
137.5 4 550.00 75,625.00
142.5 2 285.00 40,612.50
40 5,000 628,250
What is the standard deviation of this frequency distribution?

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 4. DISPERSION
Answer:

∑ 𝒇𝒙𝟐 ∑ 𝒇𝒙
S=
∑𝒇
− ( ∑ )𝟐
𝒇

𝟔𝟐𝟖,𝟐𝟓𝟎 𝟓,𝟎𝟎𝟎 𝟐
Standard deviation = − ( ) = 9.01
𝟒𝟎 𝟒𝟎

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4. DISPERSION
Coefficient of variation
The spreads of two distributions can be compared using the coeficient
of variation.
It measures the standard deviation as a proportion of the mean.

𝑺𝒕𝒂𝒏𝒅𝒂𝒓𝒅 𝒅𝒆𝒗𝒊𝒂𝒕𝒊𝒐𝒏 𝝈
Coefficient of variation = =
𝑴𝒆𝒂𝒏 𝒙

Example: Coefficient of variation

Using the data in the previous activity, calculate the coefficient of
variation as a percentage.

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 5. EXPECTED VALUES
Expected value: An expected value is a weighted average value of the
different possible outcomes from a decision, where weightings are based
on the probability of each possible outcome.
Expected values indicate what an outcomes is likely to be in the long
term, if the decision can be repeated many times over. Fortunately, many
business transactions do occur over and over again.

Expected value (EV) =∑ 𝒑𝒙

Where
∑ = sum of
p = probability of outcome occurring
x = outcome/results

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5. EXPECTED VALUES

Activity: Expected value

A wildfire photographer has entered a photography competition. From
past competitions, the probability distribution relating to the
photographer’s chances in the competition is as follows:
Place Winnings Probability
1st $100 5%
2nd $50 15%
3rd $25 10%
No place Nill 70%
What is the expected value of the photographer’s winnings?

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 5. EXPECTED VALUES

Answer:

Winnings Probability EV
$
100 x 0.05 = 5
50 x 0.15 = 7.5
25 x 0.10 = 2.50
Nil x 0.70 = Nil
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5. EXPECTED VALUES
Limitations of expected values
• Expected value is a long-run average result, therefore it is
inappropriate for one-off decisions.
• It is heavily dependent on probability distribution.
• EV ignores risk where risk is the spread or variability of outcomes.

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 6. NORMAL DISTRIBUTION
The normal distribution (or probability distribution) is a frequency
distribution and it is important because it arises frequently in ‘real life’.
Eg. If we take the population of a country and look at the distribution of
the height of all adults, it would almost certainly follow a normal
distribution. In fact, most data distribution follow a normal distribution
because the majority of items lie near to the average.

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6. NORMAL DISTRIBUTION
The normal distribution can be drawn as a graph, known as a bell-shaped
curve

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 6. NORMAL DISTRIBUTION
Properties of the normal distribution
• It has a mean, 𝜇
• The graph is symmetrical around the mean and bell-shaped
• The area under the curve totals exactly 1 (ie 100%)
• The area to the left of 𝜇 = area to the right of 𝜇 = 0.5 (ie 50%)
• At a point a certain number of standard deviations from the mean, the
area under the curve will always represent the same % of the
population (no matter what normal curve is being considered)

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6. NORMAL DISTRIBUTION
Interpreting normal distribution graphs and tables
The relative dispersion around the mean is the same for every normal
distribution.
Distances from the mean in the normal distribution are always measured
by the number of standard deviations they represent. This is knowns as
a z-score.
𝒙 𝝁
z=
𝝈

z = the number of standard deviation above or below the mean (z score)

x = the value of the variable under consideration
𝜇 = the mean
𝜎 = the standard deviation

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 6. NORMAL DISTRIBUTION
Activity: Probabilities
The average number of bottles of water consumed in three months by
accountancy students is 251. The standard deviation is 15 bottles.
Assume a normal distribution.
Required:
What is the likelihood that a student will drink:
1. More than 285 bottles?
2. Between 220-255 bottles?

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6. NORMAL DISTRIBUTION
Answer:
1. z = (285 – 251) / 15 = 2.27
0.5 – 0.4884 = 0.0116
Therefore, the probability of a student drinking more than 285
bottles in 0.0116 or 1.16%
2. z = (220 -251) / 15 = -2.07
0.4808
z = (225 – 251) / 15 = 0.27
0.1064
Therefore, the probability that a student will drink between 220 and
255 bottles in three months = 0.4808 + 0.1064 = 0.5872 or 58.72%

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 6. NORMAL DISTRIBUTION
Activity: Normal distribution
A normal distribution has a mean of 150 and a standard deviation of 20.
Required:
80% of the population is therefore below what?
Answer:
50% are below 150
Need to find 30% (30% from the tables gives a z of 0.84)
(x – 150) / 20 = 0.84
x = 166.8
80% of the population is under 166.8

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Q&A

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