Statistics for Management [QAM601]

Submitted to: Dr Nitendra Kumar

Submitted by:

1.Vishal Shishodia

2.Vishesh Sharma

3.Aditya Gaur

4.Chelsy Jain

Section- B, MBA(Finance)
 ABSTRACT
This paper provides a comprehensive guide on how to perform a T-Test
using Microsoft Excel. T-Tests are statistical analyses that help compare
means between two groups, determining if there is a significant
difference. Excel offers a user-friendly interface for conducting T-Tests,
making it accessible to a wide range of users, including researchers,
analysts, and students. This guide outlines the steps involved in setting
up and executing a T-Test, ensuring accurate and reliable results.

INTRODUCTION
T-Tests are fundamental statistical tools used to assess whether the
means of two groups are significantly different from each other. Excel
simplifies the T-Test process, providing a familiar environment for users
to perform these analyses without the need for specialized statistical
software. If you go in background of T-test, T-tests are hypothesis tests
that assess the means of one or two groups. Hypothesis tests use sample
data to infer properties of entire populations. To be able to use a t-test,
you need to obtain a random sample from your target populations. In
your study we are using Paired T-test method. Paired t-tests assess paired
observations, which are often two measurements on the same person or
item. Statisticians call these dependent samples. Suppose you gather a
random sample of people. You give them all a pretest, administer a
treatment, and then perform a posttest. Each subject has a pretest and
posttest score. Or, perhaps you have a sample of wood boards, and you
paint half of each board with one paint and the other half with different
paint. Then, you measure the paint durability for both types of paint on
all the boards. Each board has two paint durability scores.
In both cases, you can use a paired t-test to determine whether the
difference between the means of the two sets of scores is statistically
significant.

Unlike independent t-tests, paired t-tests use the same people or items in
both groups. One way to determine whether a paired t-test is appropriate
for your data is if each row in the dataset corresponds to one person or
item. For our pretest/posttest example, we measure each subject before
and after the experiment and placed the measurements for an individual
on one row.
Step by Step procedure for running Paired T-test on
MS Excel (Link to my excel worksheet-t-test.xlsx)

Step 1 Data Entry:

Begin by entering your data into an Excel spreadsheet. Organize your
data into two columns, one for each group being compared. Ensure that
each column represents a separate sample or variable.

Step 2: Descriptive Statistics:

Calculate the mean and standard deviation for each group using Excel
functions. Utilize formulas such as AVERAGE() and STDEV() to obtain
these descriptive statistics. This step aids in understanding the central
tendency and variability of the data.
Step 3: T-Test Function:
Excel provides a dedicated T-Test function, making the analysis
straightforward. Under the "Data" tab, locate the "Data Analysis" tool
and choose-“Test: Paired Two Sample for Mean”.
Step 4: Input Range and Output Options:
Specify the input ranges for your two samples in the T-Test dialog box.
Choose appropriate options, such as hypothesized mean differences and
significance level. Excel will generate a new worksheet with the T-Test
results, including the t-statistic, degrees of freedom, and p-value.
According to our example: Under Input, select the ranges for both
Variable 1 and Variable 2. In Hypothesized Mean Difference, we
typically enter zero. This value is the null hypothesis value, which
represents no effect. In this case, a mean difference of zero represents no
difference between the two methods, which is no effect. Excel uses a
default Alpha value of 0.05, which is usually a good value. Alpha is the
significance level. Change this value only when you have a specific
reason for doing so.
Step 5: Interpretation of Results:
Evaluate the T-Test results to determine the statistical significance of the
mean difference. The p-value indicates the probability of obtaining the
observed results if there is no true difference between the groups.
Typically, a p-value below the chosen significance level (e.g., 0.05)
suggests a significant difference.

The output indicates that mean for the Pre-test is 103.85 and for the
Post-test it is 107.78.
If the p-value is less than your significance level, the difference between
means is statistically significant. Again, Excel provides p-values for both
one-tailed and two-tailed t-tests—and we’ll stick with the two-tailed
result.
For our results, we’ll use P(T<=t) two-tail, which is the p-value for the
two-tailed form of the t-test. Because our p-value (0.04976837) is less
than the standard significance level of 0.05, we can reject the null
hypothesis. Our sample data support the hypothesis that the population
means are different. Specifically, the Post-test mean is greater than the
Pre-test mean.
Conclusion:
Performing a T-Test in Excel is a user-friendly and efficient way to
analyze differences between two groups. By following the outlined
steps, users can confidently conduct T-Tests, aiding in data-driven
decision-making and hypothesis testing. Excel's accessibility and
familiar interface make it an ideal tool for individuals across various
disciplines seeking to perform statistical analyses without the need for
advanced statistical software.