Implementing Contingency tables for business revenue

Contingency Table: What is it?

A contingency table is a collection of cells with counts (e.g., people, establishments, or objects, such as events). Cross-classifications relating to underlying category factors are most commonly used to arrange the cells. Contingency tables are available in a range of sizes and forms, and their entries may be created using a variety of sampling approaches. These tables are named after Karl Pearson’s early work on the relationship between two variables, X and Y. Pearson set out to assess the dependence of Y on X by analogy with regression and correlation for continuous random variables. Researchers in the social sciences are increasingly interested in the interrelationships between categorical variables (such as those found in sample surveys of persons or households) and how these interactions develop over time. In log-linear or logistic models, such connections are frequently expressed as parameters. The cross-product ratio (also known as the odds ratio) was initially developed as a formal statistical tool by George Udny Yule around the turn of the twentieth century. Following Fisher’s idea, Maurice Bartlett used Yule’s cross-product ratio to establish the notion of second-order interaction in a 2 2 2 table and devise an acceptable test for the lack of such an interaction. The log-linear model approach to contingency tables is based on Bartlett’s multivariate generalisations. Alternative statistical techniques to log-linear models can describe the relationship among variables in contingency tables linking numerous response variables. Correspondence analysis, a graphical approach to describing relationships in two-way contingency tables that has proven particularly popular in France, is the most prominent.

Business Revenue: What is it?

Revenue is the total amont of income a company makes by selling goods or services to customers. It is frequently used as a gauge of a company’s financial health. The revenue of a firm might include:

  • Product or service sales
  • Interest
  • Dividends
  • Rental revenue

Assessing your company’s income might assist you in determining how well it is operating compared to past years. Revenue may also help your business decide which items or services your clients like. This can help the firm enhance its product development process, perhaps increasing revenue. Knowing about revenue might help you accomplish your tasks more properly if you work in finance or accounting. For example, some professions use revenue data to design pricing strategies, set short- and long-term financial targets and construct project budgets. They may also use the information to prepare income statements.

How to create a contingency table for business revenue:

When variables have a restricted number of answer categories, contingency tables come in handy. However, it may be necessary to group variables into several types to analyse them effectively.

  • Determine the variables you’ll be analysing

In a contingency table, identify the two variables you want to look at. It will help if you have a purpose for combining these two variables for analysis. Determine which variable is the independent variable and which is the dependent variable. The independent variable is assumed to have an impact on the dependent variable. The independent variable is sometimes referred to as the “cause,” whereas the dependent variable is the “effect.” 

For example, raw material costs, labour salary rates, and facility leasing rates are independent variables. Raw material prices, such as food, metals, and minerals, remain constant regardless of how much a small firm spends on them. On the other hand, profit is a dependent variable in business since it is affected by the economy, sales, and costs. The manufacturing and design processes have an impact on product quality. During a recession, falling corporate revenues are influenced by the number of people laid off. Customer income, corporate earnings, capital gains, and other factors affect government tax collection.

  • Construct the Table

On your spreadsheet, click anywhere within your data. Use the “pivot table” tool in the “insert tab” to create a contingency table. Click anywhere around the data centre. From the Insert tab, choose “Pivot Table.” The “Create PivotTable” box appears. Given that you clicked at the middle of the data before building the pivot table, the default selection in “Select a table or range” should be accurate. The PivotTable may then be added to an existing worksheet. To choose a cell where the table will start, scroll down after selecting “existing worksheet” and click on a cell where you want the PivotTable to start. The current Pivot table will display in the cell you liked in this spreadsheet. Select “Add this data to the Data Model” from the drop-down menu. Then press “OK.”

  • Set Values

Set the location of your values in your PivotTable (Contingency Table). The “Pivot Table Fields” menu will appear on the right side of the screen. All of the variables in your data set are listed at the top of this menu. A grid with four fields are located at the menu’s bottom: filters, rows, columns, and values. Drag the independent variable to the columns with your mouse. Select the dependent variable and drag it to the rows—drag ID # to values. You must modify the ID# in the “values” column if it is not given as a count. Select “value field settings” from the arrow next to “values.” Choose “count” from the list of alternatives when the “value field settings” box appears. Select the tab “Show values as” while still in this window. Next, select the relevant percentages from the drop-down option. Because your independent variable is in our contingency’s columns, choose “per cent of column total.” After you’ve chosen the correct percentages, click OK. You’ve now constructed an Excel contingency table (Pivot Table) that displays rates. The row and column titles, for example, can be changed in this table. If your table’s values are provided numerically, it may be more appropriate to express them in words.

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