From the correlation table, which is based on the data of 2006: country US; it can be observed that all the independent variables are not significant except market to book value of the firms. The reason of this statement is that the significance value of all the variables except market to book value of the firms are greater than 0.05 which shows that there is no correlation between the variables. On the other hand, in the case of market to book value of the firms, it can be observed that the variable is significant.
Requirement 2
For identifying the multicollinearity among the independent variables in the same regression function, the independent variables which are highly correlated with other will have multicollinearity. However, the variables which are not correlated with the other variables will not have multicollinearity. Therefore, market to book value ratio of the firms will not have multicollinearity with the other variables.
Requirement 3
Descriptive Statistics
Lev
PROFMARG
MTBV
Size
Liquidity
CF%S
CATAR
CLTAR
EBITDA
N
Valid
175
175
175
175
175
175
175
175
175
Missing
0
0
0
0
0
0
0
0
0
Mean
35.8574
16.2154
4.1354
15.9589
1.1331
16.8331
.3903
.2501
2.5779E6
Median
50.4600
13.2100
3.1600
15.9500
.8900
12.6600
.3800
.2300
1.2736E6
Std. Deviation
4.42652E2
10.67694
9.15608
1.06869
.85147
12.61249
.19178
.11595
4.98333E6
Minimum
-5695.82
-.72
-29.60
13.38
.12
-.16
.07
.06
-7.20E5
Maximum
676.44
54.52
115.43
20.36
4.79
79.14
.86
.64
5.37E7
It can be observed that the above table is showing the descriptive statistics of the data of S&P 500 firms that include the mean, median, minimum, maximum and standard deviation of the all the variables are shown. This shows important information about the S&P 500 firms as it can be observed that mean of Leverage of the firms are high that is 35.85; however, the standard deviation of cash flow as a percentage of sales is high that is 12.6.
Requirement 4, 5, 6, 7, 8
Model Summaryb
Model
R
R Square
Adjusted R Square
Std. Error of the Estimate
Change Statistics
R Square Change
F Change
df1
df2
Sig. F Change
1
.541a
.293
.268
9.13704
.293
11.599
6
168
.000
a. Predictors: (Constant), CLTAR, Lev, Size, MTBV, Liquidity, CATAR
b. Dependent Variable: PROFMARG
ANOVAb
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
5809.913
6
968.319
11.599
.000a
Residual
14025.577
168
83.486
Total
19835.491
174
a. Predictors: (Constant), CLTAR, Lev, Size, MTBV, Liquidity, CATAR
b. Dependent Variable: PROFMARG
The ANOVA table is showing that the significance value is less that 0.05 which reflects that the model is significant and we can proceeds with the regression model. In addition to this, the table of model summary in the regression function is showing that there is strong relationship of dependent variable that is operating profit margin with the independent variables as it can be observed that there is 54.1 % relationship of operating profit margin with the current liabilities to total asset, leverage, firm size, firm's current asset to total assets, market to book value and liquidity.
Coefficientsa
Model
Unstandardized Coefficients
Standardized Coefficients
t
Sig.
Collinearity Statistics
B
Std. Error
Beta
Tolerance
VIF
1
(Constant)
14.522
11.994
1.211
.228
Lev
-.002
.002
-.103
-1.502
.135
.894
1.118
MTBV
.518
.084
.444
6.187
.000
.818
1.223
Size
.508
.721
.051
.705
.482
.809
1.236
Liquidity
1.932
1.223
.154
1.580
.116
.443
2.260
CATAR
-10.356
6.346
-.186
-1.632
.105
.324
3.087
CLTAR
-26.453
10.086
-.287
-2.623
.010
.351
2.850
a. Dependent Variable: PROFMARG
The coefficients table is showing the significance value of individual variables with the beta values, tolerance and variance inflation factor which presents the multicollinearity. It can be observed that all the independent variables are not significant except market to book value and current liabilities to total asset. The reason of this statement is that the significance value of market to book value and current liabilities to total asset is less than 0.05. In addition to this, it can be observed that there is negative relationship between the current liabilities to total asset and operating profit margin; and there is positive relationship between market to book value and operating profit margin ...