Data Analytics Exam 2
To compute the percentage change in a horizontal analysis from last year to this year, the computation will be:
(Current Year - Last Year)/ Last Year.
tools to measure variability
-max/min -stand dev -quartiles (4) / deciles (10)
tools to measure central tendencies
-mean -median -mode
If the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on asset?
0.0642
If the profit margin is 0.1142, asset turnover is 0.5619 and financial leverage is 1.2937, what is the return on equity?
0.0830
calculate confidence interval by
1 - alpha
what percentage of data is within 1 standard deviation of the mean?
68%
what percentage of data is within 2 standard deviationsof the mean?
95%
what percentage of data is within 3 standard deviations of the mean?
99%
What is the Excel formula to compute the internal rate of return for a $32,000 investment and cash inflows of $10,000 per year for years 1 through 4?
=IRR(−33000,10000,10000,10000,10000)
__________ provides comparative changes about various line items of each financial statement over time.
horizontal analysis
When using regression analysis, the relationship between two variables matters when you are trying to understand __________.
how an independent variable impacts a dependent variable
Performing a bank reconciliation is example of the diagnostic analytics of __________.
identifying anomalies/outliers
Marginal analysis __________ sunk costs (past spending that cannot be recovered).
ignores
the bigger the loan request (loan amount), the ______ likely the loan be approved (loan acceptance)
less
Predictive and prescriptive analytics provide __________ deterministic output and __________ probabilistic models (judging the likelihood (probability) of a future event or outcome occurring) as compared to descriptive and diagnostic analytics.
less; more
What would be the independent variable in a regression determining "How are firm overhead costs dependent on the time for production?" at a manufacturing company?
machine hours
The practice of bringing specific issues to the attention of management if they depart from expectation is called __________.
management by exception
The technique used in management accounting to determine the change in profit associated with the cost or benefit of the next (or the marginal) unit is called __________.
marginal analysis
the best way to analyze the extreme values in the sample is to consider the __________.
max and min
longer employment length, the ____ likely the loan will be accepted
more
The __________ recent the accounts receivable (i.e., shorter amount of time it has been outstanding), the __________ likely it will be that they will ultimately be collected.
more, more
technique used to find potential matches when there's less than an exact match
muzzy match
there is a ______ relationship between loan acceptance and the debt-to-income ration
negative
profit margin equation
net profit (or net income) / sales
A _______ t-test has more power than a _______ t-test.
one-tailed; two tailed
What is an observation that lies outside its expected distribution?
outlier
horizontal analysis compares changes of line items on financial statements ________
over time, using % change
Diagnostic analytics is broken down into all categories except for _________.
performing descriptive analytics
Analytics of the inventory item that produces the most profit is an example of the diagnostic analytics of __________.
performing drill-down detailed analytics
Diagnostic analysis includes all of the possible types of analytics except for which of the following?
performing marginal analysis
__________ is the repeatability of the financial statement variables (e.g., earnings, sales, cash flows) over time.
persistence
__________ are brief, generally small, visuals that fit within one cell in Excel that visually depict what happened in the cells next to it.
sparklines
the best way to analyze the variability in the sample is to consider the __________.
standard deviation
Descriptive analytics are characterized by __________ of the relevant data.
summarization
DuPont ratio
summarizes and disaggregates company performance and the return on equity ratio
An example of goal-seek analysis is determining __________.
the amount of sales to break even
__________ is the cost of available funds for a company, which acts as a hurdle rate that the company must overcome to create value.
the cost of capital
Bedford's Law
the frequency of a number decreases exponentially as the digit gets bigger (1 is more likely to occur than 2)
All other things equal, in which bucket would you expect the least amount of aged receivables to be?
the oldest bucket
Null Hypothesis (H0)
the statistical hypothesis tested by the statistical procedure; usually a hypothesis of no difference or no relationship
alpha is the
threshold value to determine if the statistic tested is significant
Forecasting sales for budget purposes is an example of which type of predictive analytics?
time series
Using past performance to predict future performance is called __________.
time series
What kind of analytics is generally used to forecast future sales, earnings, and cash flows from operating activities?
time series
In vertical analysis, the relevant base for long-term debt is which of the following?
total assets
What would be the dependent variable in a regression determining "How are firm costs dependent on the level of production?" at a decking company?
total production costs
ROA (DuPont Analysis)
2 components -profit margin -asset turnover
ROE (DuPont Analysis)
3 components -profit margin -asset turnover -financial leverage
What type of analytics addresses questions of "What happened?"?
Descriptive analytics
Diagnostic analytics emphasizes "What happened?".
False
Dupont analysis allows an analysis of profit margins, asset turnover and liquidity.
False (not liquidity; is financial leverage)
Testing for duplicate transactions is an example of what type of diagnostic analytics?
ID anomalies and outliers
The interest rate calculated to the point where the present value of cash inflows is equal to the present value of cash outflows is called __________.
IRR (internal rate of return)
__________ is used to help find customers that might have a similar address or name as employees.
Fuzzy matching
If the data analyst hypothesizes that grocery sales are higher on Sunday than on other days, the null hypothesis would likely state that:
Grocery sales are lower or no different on Sunday than on other days.
What type of analytics would address the question of whether a company will go bankrupt?
Predictive analytics
The calculation for return on equity using Dupont Analysis is:
Profit margin x Asset turnover x Financial leverage
alternative hypothesis
The hypothesis that states there is a difference between two or more sets of data. (Opposite of null hypothesis)
A company's descriptive statistics are appropriately compared to either 1) the economy as a whole, 2) the company's respective industry, 3) competitors and 4) the company's own prior performance.
True
A realistic expectation an accountant could hold is that addresses of the company vendors are not similar to that of the company employees.
True
A realistic expectation an accountant may hold is that "Most accounting transactions are made and recorded during normal work hours and normal workdays".
True
Descriptive analytics are analytics that characterize, summarize, and organize features and properties of the data to facilitate understanding.
True
Financial statements already contain many of the counts, totals, sums, averages, subtotals, minimums, and maximums that are needed as part of accounting descriptive analytics.
True
Prescriptive analytics will optimize the decisions based on the forecast of the future.
True
Standard cost is an estimated, or expected, cost of producing a good or service used in management accounting.
True
The balance in the cash account is deterministic as compared to being probabilistic.
True
Which tool is generally associated with prescriptive analytics?
What-if scenario
Which type of question does diagnostic analytics address?
Why did it happen?
Which type of question does predictive analytics address?
Will it happen in the future?
Paramater
a characteristic of a population
the best measure for evaluating firm efficiency in handling and using assets is __________.
asset turnover
The persistence of operating income as compared to cash flows from operations is consistent with GAAP requiring the use of __________ accounting for financial reporting purposes.
accrual-basis
If we are running a regression to analyze the question if advertising expenses are related to sales revenue outcomes, what would be the independent variable?
advertising expense
deterministic models
all events are known beg=froe hand (descriptive and diagnostic)
probabilistic models
always an element of chance of whether or not something will happen (predictive and prescriptive)
An illustration of the total aged receivables in each 30-day bucket is __________.
an example of a histogram
A series (such as monthly or annually) of fixed payments is called a(n) __________.
annuity
if a company has higher sales rev and asset turnover, it means that stockholders _______
are more profitable
accounts receivable aging puts outstanding accounts receivable in monthly ______ for further analysis
buckets
statistic
characteristic of a sample
What kind of analytics is generally used to predict whether a company's financial statements are fraudulent?
classification
Which predictive analytics technique would be used to predict whether a firm is likely to have a material misstatement in the coming year?
classification
If we run a regression where y (college completion rate) = f (factors potentially predicting college completion rate), what is the dependent variable?
college completion rate
sunk cost fallacy
commitment to prior investment escalates and makes it harder to abandon prior investments even if it may not be a rational one
In a bank reconciliation, outstanding checks are recorded by the __________, but not yet by the __________.
company; bank
chi-squared test
compares annual and expected distribution of 1st digit using Bedford's Law
__________ analytics are often the first type of analytics performed that leads to other types of analytics for further investigation.
descriptive
What type of analytics would primarily summarize facts and compute sums, averages, counts, etc.?
descriptive analytics
Evaluating the relationship between R&D expenditures and net income is an example of the diagnostic analytics of __________.
determining relations/patterns/linkages between variables through statistical analysis
What type of analytics would include Benford's law to assess whether fraud had occurred?
diagnostic analytics
confidence interval
estimated interval that may contain the population mean
p-value > alpha
fail to reject the null hypothesis (not significant result)
Which type of analysis would predictive analytics not be useful?
finding anomalies and outliers
If the critical value for a one-tailed t-test at the α = 0.05 level is 1.645, the t-statistic needed to reject the null hypothesis of no difference would be _______.
greater than 1.645
According to Altman's Z, the __________ amount of long-term profitability generally leads to __________ risk of bankruptcy.
greater; lower
A __________ is a display of rectangles with area proportional to the underlying frequency of the data.
histogram
While a __________ reorganizes and summarizes certain data using cross-tabulations without changing the underlying spreadsheet (or data), a __________ is a graphical depiction of those cross-tabulations.
pivottable; pivot chart
M score
predicts likelihood to commit fraud
If we wanted to know what level of sales would be needed to break even given the current economic environment, we would call that _______ analytics.
prescriptive
What type of analytics would primarily use what-if analysis, scenario manager, and goal seek analysis?
prescriptive analytics
p-value is the
probability of obtaining the observed results
base rate
probability of some event happening based on some historical average
Comparing the extent of long-term debt to equity is an example of __________.
ratio analysis
Descriptive quantitative analytic measures of financial statements to help evaluate liquidity, solvency, profitability and efficiency are called __________.
ratio analysis
Estimating the appropriate cost driver as part of activity-based costing is an example of which type of predictive analytics?
regression
If p-value < = alpha threshold, you should:
reject the null hypothesis (i.e., significant result).
p-value < alpha
reject the null hypothesis (significant result)
Which ratio does not include a component to evaluate financial leverage?
return on assets
asset turnover equation
sales / assets
In vertical analysis, the relevant base for cost of goods sold is which of the following?
sales revenue
The test to see if the key number field in a record is in correct ascending or descending order is called a(n) __________ check.
sequence
test to see if key number field in record is in correct ascending/descending order
sequence check
If the p-value of the chi-square test is __________ than the α (alpha) threshold, we could conclude that the observed relationship is __________ than that expected from Benford's law.
smaller, different
drill-down analysis looks for
underlying patterns in the data at detailed level
Which distribution is a probability distribution where all outcomes are equally likely?
uniform distribution
The practice of identifying the difference between a budget amount and actual performance is called:
variance analysis
__________ expresses financial information in relation to some relevant figure or base.
vertical analysis
Which statistic tells us how many standard deviations (σ), a data point (or observation), xi, is from its population mean, μ?
z-score