# Linear Regression

Pages: 2 (518 words) Published: August 25, 2013
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. 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 (EBIT) 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...