Page 233 - DMGT404 RESEARCH_METHODOLOGY

Unit 10: Time Series

Periodic Variations: The variations that repeat themselves after a regular interval of time. Notes
Random Variations: The variations that do not reveal any regular pattern of movements.
Secular Trend: It is the general tendency of the data to increase or decrease or stagnate over a
long period of time.

10.9 Review Questions

1. Smart Discount Stores: There are 2117 Smart stores in the India (the chain is building up).
It is one of India’s most interesting discounters tracing its origins back to 1980’s and the
opening of the first Smart store. At present Smart has reached an “upgrading” phase like
so many discounters before.

Given the data below, perform the indicated analyses.
Year 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
Earnings
Per Share 19.0 17.5 20.7 28.4 27.4 23.9 21.1 16.1 8.5 11.1
Dividends
Per Share 9.9 9.5 9.0 8.1 6.8 5.0 3.0 2.4 2.2 1.9

Pre-tax
Margin 2.1 2.0 3.1 4.9 5.4 5.7 5.8 5.8 3.3 5.3
(a) To what extent does the Board of directors regard dividend payments as a function
of earnings? Test whether there is a significant relationship between the variables.
Use a parametric analysis.
(b) Find the linear forecasting equation that would allow you to predict dividend
payments based on earnings and test the significance of the slope.

(c) Is there a significant difference in pre-tax margin when comparing the periods 1995-
1999 and 1990-1994. Perform a non-parametric analysis. Explain the managerial
implications of your findings.

2. Big and Small Apples Employment figures in thousands for Neo-Classical City and suburbs
are given below. Perform the required analyses:
(a) Using linear forecasts, predict the year in which employment will be the same for
the two locations.
(b) Construct the NCC confidence interval for that year.
(c) Correlate the employment figures for the two areas using both parametric and non-
parametric methods and test the significance of the correlation coefficients.
(d) Fit a modified exponential trend to SUB data and discuss the results in terms of your
findings in (a) above.
(e) Are NCC employment figures uniformly distributed over the period 1994 through
2000?
YEAR 1994 1995 1996 1997 1998 1999 2000
NYC 64.1 60.2 59.2 59.0 57.6 54.4 50.9
SUB 20.7 21.4 22.1 23.8 24.5 26.3 26.5

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