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Linear Regression

Scatter Plots Linear regression Is a crucial tool In Identifying and defining key elements influencing data. Essentially, the researcher is using past data to predict future direction. Regression allows you to dissect and further investigate how certain variables affect your potential output.

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Once data has been received this information can be used to help predict future results. Regression is a form of forecasting that determines the value of an element on a particular situation. Linear regression allows us to create formulas to define the effects of a variable.

Data analysis Is an Important concept In Improving business results. There Is no reason why we would not use the data to help forecast for the future. The information is available and reliable and will explain the breakdown of the entire business process. Break Even Calculations Break-even calculations are used to denote a firm’s capital structure, to the extent to which fixed Income securities, debt and preferred stock, are used. The operating leverage can be depicted by graphs to demonstrate relevant probability distributions.

Break even points are determined by the quantity measurement of operating income (BIT) being equal to zero, which applies that sales revenues are equal to costs. Break-even analysis, from an operational perspective focuses on the choice of processes, which Implies that the two processes have equal costs for a specific level of volume, referred to as the break-even point. To determine how much volume of business a company must do to break-even can be stated in either monetary units or product unit.

The linear model that is utilized to conceptualize the processes denotes that the selling price per unit is constant. In other words the banks fixed costs are the predetermined Interest rates, which Is what the banks financial business depends upon. The variable costs remain constant, which refers to costs for labor. Fixed costs remain constant, which are the operation costs that do not change, such as facility operation costs, insurance and taxes on the facility, senior management salaries, and other overhead expenses.

How Does this affect our business? If we go back to the topics we discussed during week two, our business, Diamond Banking, was Interested In the correlation between customer account balances and the number of ATM transactions occurring. Business executives for the company should be interested in using both Linear regression models and break even calculations to determine deferent aspects of the business model. We want to use linear regression to compare past data and net profit with current usage and profits gained.

As with every business, we want to make sure that the amount of money we put into operating and servicing the Tam’s does not amount to more than the profit we receive from consumers using them. This is where break even calculations would be useful. There are many more examples that we could use in our business practices, both everyday uses, and for yearly comparisons. Graphs, charts and equations models are essential in monitoring and understanding past business successes and failures, and must be used both in current and future annihilation of the business model.