Submission Instructions

Case Study II

Points Due: Week 14

Purpose

To assess your ability to apply the standard normal probability distribution to a business problem.

This can be worked either as an individual project or as a project group of 4 or 5 persons. This project group may differ from the original work group to which you were assigned. That original group will continue to work as needed. If you wish to work with someone on the projects please notify your instructor for approval. If you need someone to work with contact your instructor for advice.

Action Items

1. Gather data:
1. Gather a list of the companies that comprise
1. Fortune 500;
2. Choose top 200 companies. Record the information about their revenues and profits.
3. Randomly choose 50 companies from your list. (You may use Excel to do this or you may use a random number generator, or you may use a random number table.)
4. For the 50 randomly chosen companies research the revenue and profit. Load these data into your Excel worksheet. (SAVE THESE DATA)
5. Determine the mean and standard deviation of the sample revenues of companies.
6. Determine the mean and standard deviations of the sample profits of companies.
7. Using Excel creates a histogram of the companies’ revenues and profits with about 8 bars (Excel uses bins to group the data).
8. Compare the results; distinguish the differences.
9. Using Excel, assume that the distribution of all 1000 companies is normal and using the standard normal z distribution find:
1. Probability that the profit is greater than $90,000 million
2. Probability that the profit is less than $75,000 million
3. Probability that the profit is between $50,000 and $75,000 million
10. Determine the actual percent of your sample that is within one, two, and three standard deviations of the mean.
2. Write a paper including the following:
1. An Introduction;
2. A detailed description of how you chose your sample;
3. The results of problem 1 parts c. – j.;
4. A description of whether or not you believe that this population is normal and how that might affect your answers to Problem 1, part i above; and
5. Your findings about the companies’ profits. Describe what you can say about all of the companies, including those in problem 1 part i. above and including both the Empirical and Chebyshev’s rule. Include a comparison of the percents in problem 1 part j.
3. Put your Excel spreadsheets in an appendix to the paper. Save these data.

Submission Instructions

1. This is a formal report which should be in MLA format with tables and graphs from Excel imbedded in the text of the Word document. Make sure to title your paper with a running header labeled with your name, the class number, and the assignment number.
2. Your report should contain the following:
1. An introductory paragraph.
2. An explanation of the way you chose the sample that explains why it is random.
3. A description of the shape of the sample including its mean and standard deviation and supported by the histogram. Based on this analysis infer the shape of the population of all companies’ financial data.
4. The actual percentage of your sample within one, two and three standard deviations of the mean and an explanation of how this fits with Chebyshev’s and the Empirical rule.
5. Determine and show the computations for the percentages in section 1 part g above and then discuss how these would be affected if the population is not normal. Include in that discussion any indication of the population of all companies’ profits is or is not normal.
6. Include a listing of the sample with current financial data in Appendix A of your document.
7. An explanation of what you learned.

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