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Role of Statistics in Business & Finance

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146 views20 pages

Role of Statistics in Business & Finance

stats

Uploaded by

nitinvohra_capricorn
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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ROLE OF STATISTICS IN BUSINESS & FINANCE

What Is Statistics?
1.

Collecting Data
e.g., Survey

Data Analysis

Why?

2.

Presenting Data
e.g., Charts & Tables

3.

Characterizing Data
e.g., Average

DecisionMaking

JITIN 1984-1994 T/Maker Co.

APPLICATION OF STATISTICS IN BUSINESS

JITIN

PERFORMACE MANAGEMENT
A manager collects data about employee productivity, such as the number of tasks completed or the number of units produced. He must analyze data to find ways in which an employee should improve to achieve maximum productivity.

BUSINESS DECISION MAKING


Business owners face many situations with outcomes that seem unpredictable. Data and statistics can be used to concretely define and measure uncertainty and predict the future. Managerial decision-making with this statistical insight can avoid steering production, costs and customer service into bad avenues.

A company also uses statistics in market research and product development, using different surveys, such as random samples of consumers, to gauge the market for a proposed product. Survey results might justify spending on developing the product. A product launch decision might also include a breakeven analysis, such as finding out what percentage of consumers must try a new product for it to be successful.

RESEARCH AND DEVELOPMENT

JITIN

ABHISHEK KWATRA

The Consumer Price Index or CPI measures the overall change in the prices of goods and services that people typically buy over time.
As everyone has differing tastes and spending habits, the CPI measures prices for a huge assortment of items. Not only does it measure price changes but changes in prices odf services such as taxi-fares, insurance etc.
This collection of items is normally referred to as the basket of goods and services.

The basket does not apply to any particular person or family but represents an average household

HBS is carried out every 5 years by the CSO to measure the income and expenditure of households. The data from the HBS is used as the basis for the weighting of items in the CPI basket.

The basket currently covers a range of consumer goods and services. A total of 632 items are included in the basket and these items are representative of goods and services typically purchased by the average consumer. The basket is split on the basis of 55% covering Services with the remaining 45% covering Goods

To measure Consumer Price Index, a modified version of Laspeyres index number is used

Laspeyres index number : P01 = ( P1Q0) ( P0Q0)

100

P1= prices in the current year


P0= prices in the base year Q0= quantity produced in the base year

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ROLE OF STATISTICS IN FINANCE


Statistics plays a leading role in finance. The markets makes it more and more difficult for practitioners to correctly value financial asset. Statistical analysis has become a powerful tool for a better market valuation.
ABHISHEK ARORA 11

explosive development of increasingly complex

Statistics knowledge demand is steadily increasing in Hedge funds, Investment Banking and Financial Institutions in general, where statistics students can develop a professional career. Finance can be seen as a way to motivate students on the applications of almost any statistical tool

we would like to teach them, since we could


always find an example where these techniques

are put into practice.


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The major economic crisis experienced in Europe between 1875 and 1895

brought about the need for a major application of the academic statistical
concepts to organize and record new statistical data such as consumer price indexes of workers, family budgets or unemployment days.

This way, survey techniques and mechanical processing of information became to be widely used to solve practical problems in economics.

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RATIOS WHICH MATTERS IN BUSINESS


14
MRINAAL JAIN

15

'Earnings Per Share - EPS'


The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Calculated as:

16

MRINAAL

'Price-Earnings Ratio - P/E Ratio'


A valuation ratio of a company's current share price compared to its per-share earnings.

Calculated as:
Market Value per Share

Earnings per Share (EPS)

17

Whether designing new products, streamlining a production process or evaluating current vs. prospective customers, todays

business managers face greater complexities than ever before.


Running a shop on instinct no longer suffices. Statistics provide managers with more confidence in dealing with uncertainty in

spite of the flood of available data, enabling managers to more


quickly make smarter decisions and provide more stable leadership to staff relying on them.

18

THANK YOU
FRIENDS
19

GROUP MEMBERS

20

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