Correlation coefficient, Managerial Accounting

Correlation coefficient (r)

Correlation coefficient measures the degree of association between two variables such as the cost and the activity level.

r = nΣxy   -  Σx  Σy
     [nΣx2 – (Σx)2 ] [nΣy2  - (Σy)2]


When the degree of association among the two variables is very close then it would be almost possible to plot the observation on a straight line and r will be almost equal to one.

-1≤ r ≤ 1

If r= -1, then the two variables are said to be perfectly negatively correlated
If r = +1, then the two variables are perfectly positively correlated
If r = 0, then there is no correlation between the two variables.

Posted Date: 12/5/2012 6:11:51 AM | Location : United States







Related Discussions:- Correlation coefficient, Assignment Help, Ask Question on Correlation coefficient, Get Answer, Expert's Help, Correlation coefficient Discussions

Write discussion on Correlation coefficient
Your posts are moderated
Related Questions
In the earlier unit, we have studied how firms determine their requirements for current assets and manage their holdings in cash and marketable securities. Inside a classical manuf

1) What is the difference between decreasing marginal returns and negative marginal returns?   2.) "A firm in monopolistic competition maximizes its profit by producing where it

Std error of the slope (Sb) Correlation coefficient measures the degree of association between two variables such as the cost and the activity level. The standard error of ‘

Explain performance budgeting according to seal and summers According to seal and summers performance budgeting comprises three elements:  a) The result (final outcome)


Review the options and views available to answer the following questions: 1. What sort of information is being provided by the dashboard? What visual objects are used?     Wh

Receivable management is a specialized activity and needs various time and effort on the part of the firm. Collection of receivables frequently poses problems, mainly for small and

Explain the Investment versus Speculation? In brief describes the following terms: a) Investment versus Speculation. b) Active and Passive Equity Management c) Systematic v

The CP introduced in the Indian financial market, for the recommendations of the Vaghul Committee has turn into a well-liked debt instrument of the corporate world. Commercial Pape

Interpretation of equity ratio As equity ratio show the relationship of owner funds to total assets higher the ratio or the share of the shareholders in the total capital of th