Coefficient of determination, Managerial Accounting

Assignment Help:

Coefficient of Determination (r2)

If the regression line calculated by the least square method were to fit the actual observations perfectly, then all observed points would lie on the regression line. The coefficient of determination, r2, explains the amount of variation in Y which is explained by the introduction of X in the model. A perfect linear relationship between X and Y would result in r2 being equal to 1.

r2 =  (explained variation)/(Total variation) 
       
 
  = [∑(Y  - ý)2] / [∑ (Y- ý)2]

Where:

ý is the mean value of Y

For computation purposes r2 can be given by

r2 =   (n ∑ xy  - ∑ x ∑x)2
       [n ∑x -( ∑x)2]  [n ∑y2 – (∑y)2]


Related Discussions:- Coefficient of determination

Definition of the mission and goals of the organization , Definition of the...

Definition of the Mission and Goals of the Organization Generally the organization has already established mission and aim statements. Though, it may be essential to redefine

Explain prerequisites of a sound variances analysis system, Prerequisites o...

Prerequisites of a sound variances analysis system A variance analysis system would be good enough in controlling costs and evaluation performances if the following requirement

A local retail shoe shop , Shoe Shine is a local retail shoe shop located o...

Shoe Shine is a local retail shoe shop located on the north side of Centerville. Yearly demand for a popular sandal is 500 pairs, and John Dirk, the manager of Shoe Shine, has been

Debentures, 500 000 debentures are in a company at a coupon value of R50 ea...

500 000 debentures are in a company at a coupon value of R50 each in issue. During each financial year, interest on these debentures is paid in arrears and in equal quarterly inst

Explain standard costing according to backer and jacobsen, Explain standard...

Explain standard costing according to backer and Jacobsen According to backer and Jacobsen, standard cost is the amount the firm to measure the variation from standard costs th

#titDescribe the "agency problem" and the Sarbanes-Oxleyle.., Discuss the d...

Discuss the dominant compensation philosophy, share value creation and the link between company size and executive pay. Solve Parmalat''s case, which may be found in reading No. 8.

What procedure are followed in kaizen costing, What Procedure are followed ...

What Procedure are followed in kaizen costing In brief kaizen costing involves setting a new cost reduction target every month. The difference between the target profits and th

Treasury management, Treasury management is explained as "the corporate han...

Treasury management is explained as "the corporate handling of all financial matters, the production of external and internal funds for business, the management of cash flows and c

Explain the ratio analysis according to kosher, Explain the Ratio analysis ...

Explain the Ratio analysis according to kosher A ratio is the relation of the amount a to another b expressed as the ratio of a to b; a: b (a is to b) or a as simple fraction i

Marketing decisions, Marketing refers to the promotion of products, ...

Marketing refers to the promotion of products, especially advertising and branding. But marketing includes product management, pricing, prom

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd