Medgar Evers College
School of Business
ECON 356: Business & Economic Statistics II
Problem #1
You have data on the Purchasing Power of the US dollar from 1950 to 2005. The data is in the Excel file (US_PRICE_INDEX)
Use the data to recalculate the actual relative prices (PPI and CPI) between 1950 and 2005. The PPI is the Reciprocal of the Purchasing Power Index. The CPI is the Reciprocal of the CPI, beginning in 1950. Create two new columns called the CPI and the PPI. The CPI in 1950 should be 100 or 1.00. The PPI in 1950 should be 100 or 1.00 calculated as B2/$B$2, for example
Prepare a new Table showing the Calculated Price Indexes (Attach as Appendix I to our report)
Plot the chart of PPI and CPI and explain the relative trends in the two price indices
Which Index has risen faster and since what year did one diverge significantly from the other?
Which index has a rising trend? Which index has a declining trend? Alternatively, are the two indexes moving in the same direction? Explain your answer
Problem #2
The manager of Mark Cricket and Company is concerned that the companies profit margin has been declining during that last 20 months. The manager believes that Expenses are outpacing revenues.
Use the data in the attached Excel file (PROFITABILITY) to support or refute the manager’s concern.
In order resolve the issue raised by the manager, you need to plot a time series chart of the Net Profit Margin of the company over the last 20 months.
You should also prepare a table (See Example Below) showing your computation of the Net profit margin of the Mark Cricket Company. Attach your table as Appendix II
Month
Sales
Profit
Net Profit Margin
Jan-05
$ 37,000.00
$4,120.00
11.14%
Feb-05
$ 38,900.00
$4,200.00
10.80%
Mar-05
$ 41,200.00
$3,960.00
9.61%
Apr-05
$ 39,600.00
$4,010.00
10.13%
Your chart must be on a clear background and must be properly labeled, with no lines from the Excel spreadsheet file
The two charts must be cut and pasted on MS-Word and reported together in one document file.
Please do not submit two files. Only one file will be graded
YEAR
PPI
CPI
1950
3.546
4.151
1951
3.247
3.846
1952
3.268
3.765
1953
3.300
3.735
1954
3.289
3.717
1955
3.279
3.732
1956
3.195
3.678
1957
3.077
3.549
1958
3.012
3.457
1959
3.021
3.427
1960
2.994
3.373
1961
2.994
3.340
1962
2.985
3.304
1963
2.994
3.265
1964
2.985
3.220
1965
2.933
3.166
1966
2.841
3.080
1967
2.809
2.993
1968
2.732
2.873
1969
2.632
2.726
1970
2.545
2.574
1971
2.469
2.466
1972
2.392
2.391
1973
2.193
2.251
1974
1.901
2.029
1975
1.718
1.859
1976
1.645
1.757
1977
1.546
1.649
1978
1.433
1.532
1979
1.289
1.380
1980
1.136
1.215
1981
1.041
1.098
1982
1.000
1.035
1983
0.984
1.003
1984
0.964
0.961
1985
0.955
0.928
1986
0.969
0.913
1987
0.949
0.880
1988
0.926
0.846
1989
0.880
0.807
1990
0.839
0.766
1991
0.822
0.734
1992
0.812
0.713
1993
0.802
0.692
1994
0.797
0.675
1995
0.782
0.656
1996
0.762
0.638
1997
0.759
0.623
1998
0.765
0.614
1999
0.752
0.600
2000
0.725
0.581
2001
0.711
0.565
2002
0.720
0.556
2003
0.698
0.544
2004
0.673
0.530
2005
0.642
0.512
Table II
Net Profit Margin
Mark Cricket Company
January 2005-August 2006
Month
Sales
Profit
Jan-05
$37,000.00
$4,120.00
Feb-05
$38,900.00
$4,200.00
Mar-05
$41,200.00
$3,960.00
Apr-05
$39,600.00
$4,010.00
May-05
$40,500.00
$3,950.00
Jun-05
$42,000.00
$3,875.00
Jul-05
$43,500.00
$3,800.00
Aug-05
$41,500.00
$3,910.00
Sep-05
$44,100.00
$3,602.00
Oct-05
$42,800.00
$3,500.00
Nov-05
$43,700.00
$3,680.00
Dec-05
$47,900.00
$3,476.00
Jan-06
$46,790.00
$3,680.00
Feb-06
$49,000.00
$3,367.00
Mar-06
$46,800.00
$3,578.00
Apr-06
$48,680.00
$3,456.00
May-06
$50,100.00
$3,345.00
Jun-06
$46,900.00
$3,672.00
Jul-06
$50,330.00
$3,409.00
Aug-06
$49,890.00
$3,256.00
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