The objective of our study is to analyze the impact of Research and Development on the Sales / Revenue for products of Apple Inc. USA. We are also interested in finding the level of the impact, if any. For meeting our objective, we will be using statistical tools to analyze the data. Particularly we will be using graphs and descriptive analysis for meaning full outcome. In addition to the above, we will also be using regression analysis to measure the amount of impact of R&D on Sales / Revenue.
INTRODUCTION AND DATA DESCRIPTION
Apple Inc. – multinational technology company, is one of the giant and most renowned for its technology products all across the globe. In addition to being the largest publicly traded corporation in the world by market capitalization, Apple became the first U.S. company to be valued at over $700 billion. Apart from the retail stores, Apple operates the online Apple Store and iTunes Store, the latter of which is the world’s major music retailer. Apple Inc. being a crucial part of the IT industry intrigued me to explore the possible factor behind its continuous upsurge in sales revenue.
Therefore, the data points have been collected annually from 2010 to 2014. The quantitative data is a time series yearly data. This data will further be analyzed in order to determine the impact of R&D on Sales / Revenue of Apple Inc.
MEASURE OF LOCATION
R&D (in Billions of USD) Descriptive Statistics Mean 3.622 Standard Error 0.756811734 Median 3.38 Mode #N/A Standard Deviation 1.692282482 Sample Variance 2.86382 Kurtosis -0.644514126 Skewness 0.58560099 Range 4.26 Minimum 1.78 Maximum 6.04 Sum 18.11 Count 5
In the above table, the mean illustrates the average value of R&D expenditure during 2010-2014. The mean value is $3.622B. The mean value lies between 2nd and 3rd Quartile. The median is equivalent to the 2nd Quartile, i.e. 3.38. There is no mode applicable during the 4-year period. The measure of variability: Standard deviation, Sample Variance and Range are 1.692282482, 2.86382 and 4.26 respectively.
Sales Revenue (Billions $) Descriptive Statistics Mean 136.572 Standard Error 21.84402582 Median 155.97 Mode #N/A Standard Deviation 48.84472663 Sample Variance 2385.80732 Kurtosis -0.826153874 Skewness -0.871931968 Range 117.28 Minimum 65.07 Maximum 182.35 Sum 682.86 Count 5
In the above table, the mean illustrates the average value of Sales Revenue during 2010-2014. The mean value is $136.572B. The mean value lies between 2nd and 3rd Quartile. The median is equivalent to the 2nd Quartile, i.e. 155.97. There is no mode applicable during the 4-year period. The measure of variability: Standard deviation, Sample Variance and Range are 48.84472663, 2385.80732 and 117.28 respectively.
A Percentile provides information about how much the data is spread over the interval from the smallest to the largest value. The data is divided in three Quartiles i.e. Q1, Q2 and Q3 or 25th, 50th and 75th quartile respectively.
Quartiles For Research & Development 25th Q1 2.43 50th Q2 3.38 75th Q3 4.48 Quartiles For Sales Revenue 25th Q1 108.6 50th Q2 155.97 75th Q3 170.87
Graphical Representation of R&D and Sales Revenue
MEASURE OF VARIABILITY
Interquartile Range Research and Development (in Billions of USD) 2.05 Sales Revenue (in Billions of USD) 62.27
Coefficient of Covariance
Coefficient Of Variance (%) Research and Development (in Billions of USD) 46.72232143 Sales Revenue (in Billions of USD) 35.76481756
The coefficient of variation for R&D has been computed to be about 46.72232143%. This is the amount of fluctuation in the Research and Development over the years.
The coefficient of variation for Sales Revenue has been computed to be about 35.76481756%. This is the amount of fluctuation in the Sales Revenue over the years.
MEASURE OF ASSOCIATION
R&D (in Billions of USD) Sales Revenue (in Billions of USD) R&D (in Billions of USD) 1 Sales Revenue ( in Billions of USD) 0.908774624 1
The correlation, i.e. 0.908774624, is very high. This implies a very good level of association between the R&D and Sales Revenue. Moreover, the variables are positively correlated.
This is a measure of the linear association between two variables; in other words, it reflects how one series is different from the other.
R&D (in Billions of USD) Sales Revenue (in Billions of USD) R&D (in Billions of USD) 2.291056 Sales Revenue (in Billions of USD) 60.094776 1908.645856
Kushall K Mehta
The covariance between two variables, R&D and Sales Revenue, is 60.095 approximately.
There seems to be a positive relationship between R&D and sales revenue.
The regression equation that we have computed is:
Research & Development = 41.566 + 26.23 Sales Revenue
This implies if Sales / Revenue increases by Rs.1, the Research & Development will increase by Rs.26.23. Also, R2 is quite high i.e. 0.82587. Therefore, the model is a good fit.
There seems to be a very good relationship between Research & Development and Sales / Revenue, which was clearly reflected through a high regression value i.e. 0.82587. Technology based company, Apple Inc., that is constantly evolving requires R&D in order to out-compete others and sustain leadership in the industry. Therefore, Apple Inc. has been investing huge amounts in R&D that helped them to come up with unique innovations and creativity (for instance: IPad Tablets, Smartwatches, etc) thereby causing a positive growth in Sales Revenue. Moreover, there is no sharp falls or gains in the sales of Apple Inc., which indicates the financial status of the company is quite stable, therefore, it is a wise idea for Apple Inc. to invest more in R&D as it eventually benefits the company.
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