Business Statistics

Week 1
Introduction to Business Statistics & Excel

Business Team Meeting In Boardroom by Matthew Henry

https://burst.shopify.com/photos/business-team-meeting-in-boardroom?q=chart
Data & Variables

Learning Outcomes:
• Understanding data and random variables
• Understanding type of data
• Visualizing data in Excel
• Normalizing data for comparability
Random Variables

Definition: experiment outcome whose values may vary due to chance

• Business outcomes are rarely predictable, hence they are random

variables

• Repeated observations of random variables produce spread of values.

• These observations are “data” that is relevant in analysing the problem.

Cross Sectional & Time Series Data
• The data is cross sectional when observations of a quantity are taken
across objects of interest, at any one time.
(e.g. 2022 total spending on internet data of 1 million customers of a
telecommunication company).

• The data is time series when observations are taken of the same quantity
across time
(e.g. sales over 52 weeks)
Types of Data
Categorical 🡪 regarded as labels with sense of ordering (ordinal) or not
(nominal).
⮚ Numerical operations are not meaningful.
⮚ e.g. gender, education level (primary, high school, higher
education)

Numeric 🡪 arise from counting (discrete) or measuring (continuous).

⮚ Numerical operations are meaningful.
⮚ e.g. number of students, sales per year
Example: Real Estate Data

Variable Type
Price Numeric (continuous)
Beds Numeric (discrete)
Baths Numeric (discrete)
Cars Numeric (discrete)
Area Numeric (continuous)
School Zone Categorical (nominal)
Auction Categorical (nominal)
New Categorical (nominal)
Subdivided Categorical (nominal)
Visualizing Data
Categorical 🡪 regarded as labels with sense of ordering (ordinal) or not
(nominal).

▪ Bar Chart – great for illustrating relativity, particularly for ordinal

▪ Pie Chart – great for illustrating portions/shares

Numerical 🡪 arise from counting (discrete) or measuring (continuous).

▪ Bar Chart, for discrete data

▪ Histogram, for continuous data
▪ Box Plot
Visualizing Categorical Data
Auction Yes No Total
Frequency 178 151 329
Relative Frequency 54.10% 45.90% 100.00%
Visualizing Discrete Data

Relative
Beds Frequency
Frequency
2 29 8.81%
3 138 41.95%
4 108 32.83%
5 45 13.68%
6 8 2.43%
8 1 0.30%
Grand
329 100.00%
Total
Creating Bar Chart in Excel
Highlight one of data cells,
Insert > Pivot table (In Mac Data > Pivot table).

Select Existing Worksheet, then specify the cell location.

Creating Bar Chart in Excel
Drag & drop Beds Right click on Beds entries > Value Field Setting >
under Rows & Values. Summarize value by > Count; Show Values As > % of Grand Total
Creating Bar Chart in Excel
Highlight table > Insert > 2-D Column bar chart
Visualising Continuous Data

Relative
Bin Range Frequency
Frequency
500-999 104 31.61%
1000-1499 173 52.58%
1500-1999 35 10.64%
2000-2499 9 2.74%
2500-2999 5 1.52%
3000-3499 2 0.61%
3500-3999 1 0.30%
Creating Histogram in Excel
Drag & drop Price Right click on Beds entries > Value Field Setting >
under Rows & Values. Summarize value by > Count; Show Values As > % of Grand Total

Right click on Row

Labels entries > Group
Creating Histogram in Excel
Highlight table > Insert > 2-D Column bar chart
Right click on bars > Format
Data Series > Adjust Gap
Width to 0
Concept Check
Normalization of Data
Purpose: comparability across observations
• Data does not always come in comparable units
• E.g. Store financial performance – which store is most profitable?
Store Sales ($000) Profit ($000) Investment ($000)
A 203.373 8.06 36
B 501.524 54.229 2293
C 102.427 17.981 199
D 605.459 94.891 1889
E 1007.699 70.913 1064
F 148.544 23.005 127
G 605.736 108.656 4223
Normalization of Data
Purpose: comparability across observations
• Data does not always come in comparable units
• E.g. Store financial performance – which store is most profitable?

Store Sales ($000) Profit ($000) Net Profit %

A 203.373 8.06 3.96%
B 501.524 54.229 10.81%
C 102.427 17.981 17.55%
D 605.459 94.891 15.67%
E 1007.699 70.913 7.04%
F 148.544 23.005 15.49%
G 605.736 108.656 17.94%
Normalization of Data
Purpose: comparability across observations
• Data does not always come in comparable units
• E.g. Store financial performance – which store gives most returns on
investment?
Store Sales ($000) Profit ($000) Investment ($000)
A 203.373 8.06 36
B 501.524 54.229 2293
C 102.427 17.981 199
D 605.459 94.891 1889
E 1007.699 70.913 1064
F 148.544 23.005 127
G 605.736 108.656 4223
Normalization of Data
Purpose: comparability across observations
• Data does not always come in comparable units
• E.g. Store financial performance – which store gives most returns on
investment?
Store Profit ($000) Investment ($000) ROI
A 8.06 36 22.39%
B 54.229 2293 2.36%
C 17.981 199 9.04%
D 94.891 1889 5.02%
E 70.913 1064 6.66%
F 23.005 127 18.11%
G 108.656 4223 2.57%
Normalization of Data
Purpose: comparability across observations
• Choice of normalization depends on the purpose of the analysis!

Store Profit ($000) Net Profit % ROI

A 8.06 3.96% 22.39%
B 54.229 10.81% 2.36%
C 17.981 17.55% 9.04%
D 94.891 15.67% 5.02%
E 70.913 7.04% 6.66%
F 23.005 15.49% 18.11%
G 108.656 17.94% 2.57%
Normalization of Data
Other common normalization
a. across time; real vs nominal values (CPI adjusted)
• Consumer Price Index (CPI): a weighted average of prices for everyday goods
and services people buy. It is indexed to 100 in the base period and is used
to calculate the inflation rate.
• Nominal value: value that is measured in terms of actual prices that exist at
the time.
• Real value: the value of the same item after it has been adjusted for
inflation.

b. across observations; e.g. percentage, per capita

Comparing Australia’s Quarterly Real GDP per capita over time

Nominal vs Real GDP

600000

500000

400000

300000

200000

100000

May-11
Feb-03

Sep-07
Aug-08
Jul-09

Feb-14

Sep-18
Aug-19
Jul-20
Dec-04
Nov-05

Dec-15
Nov-16
Oct-17
Oct-06

Apr-12
Mar-02

Jan-04

Jun-10

Mar-13

Jan-15

Jun-21
Nominal GDP Real GDP (Mar-02 base)

Real GDP = GDP in dollar value of the base index period.

Comparing 2014 CO2 Emissions by Country

CO2 Emissions CO2 Emissions per

Country Name Population (thousands)
(kiloton) capita (kiloton)
Qatar 107,853.80 2,459.20 43.86
Curacao 5,881.87 155.91 37.73
Trinidad and Tobago 46,273.87 1,362.34 33.97
Kuwait 95,408.01 3,690.94 25.85
Bahrain 31,338.18 1,336.08 23.46
United Arab Emirates 211,369.55 9,214.18 22.94
Brunei Darussalam 9,108.83 409.77 22.23
Sint Maarten (Dutch part) 733.40 37.69 19.46
Saudi Arabia 601,046.97 30,916.99 19.44
Luxembourg 9,658.88 556.32 17.36
United States 5,254,279.29 318,386.42 16.50
New Caledonia 4,290.39 268.05 16.01
Gibraltar 528.05 33.73 15.66
Australia 361,261.84 23,475.69 15.39
Oman 61,169.23 4,027.26 15.19
Canada 537,193.50 35,437.44 15.16
Estonia 19,519.44 1,314.55 14.85
Palau 260.36 17.63 14.77
Kazakhstan 248,314.57 17,288.29 14.36
Source: Climate change indicators from the World Bank available at: http://data.worldbank.org/indicator
Key Takeaways

• Basic Excel skills

• Excel set-ups, cell referencing, formulas
• Variable vs data
• Data is the collection of observations of random variables
• Data need not be numeric, it can be categorical and discrete
• Constructing frequency tables of data using Pivot Tables
• Charting different types of data
• Data normalization for comparability
Reminders:

• No lecture quiz this week

• Attend only your allocated tutorial time for your tutorial submission
• Get to know your tutorial mates and start forming a group
• Come to campus for lecture!!!