Business Statistics

Dr. Suvarna. Vijayakumar. Nimbagal.

Assistant Professor
Hubballi
Meaning
• For a layman, ‘Statistics’ means numerical information expressed in quantitative
terms.
• This information may relate to objects, subjects, activities, phenomena, or regions.
• As a matter of fact, data have no limits as to their reference, coverage, and scope.
• At the macro level, these are data on gross national product and shares of
agriculture, manufacturing, and services in GDP (Gross Domestic Product)
• At the micro-level, individual firms-small or large, produce extensive statistics on
their operations.
• The annual reports of companies contain a variety of data on sales, production,
expenditure, inventories, capital employed, and other activities.
• These data are often field data, collected by employing scientific survey techniques.
• Unless regularly updated, such data are the product of a one-time effort and have
limited use beyond the situation that may have called for their collection
Origin
• Branches of mathematics concerned with the collection, analysis,
interpretation, and display of numerical data. 
• Statistics may be said to have their origin in census counts taken
thousands of years ago;
• as a distinct scientific discipline, it was developed in the early 19th
century as the study of populations, economies, and moral actions
and later in that century as the mathematical tool for analyzing
such numbers. 
• It comes from the word Italian word Statista(Salesman)
Definition
• A.L. Bowley has defined statistics as: (i) statistics is the science of
counting, (ii) Statistics may rightly be called the science of averages,
and (iii) statistics is the science of measurement of social organism
regarded as a whole in all its manifestation.
• W.I. King has defined Statistics in a wider context, the science of
Statistics is the method of judging collective, natural, or social
phenomena from the results obtained by the analysis or
enumeration or collection of estimates.
• Seligman explored that statistics is a science that deals with the
methods of collecting, classifying, presenting, comparing, and
interpreting numerical data collected to throw some light on any
sphere of inquiry.
Major characteristics of statistics :
(i) Statistics are the aggregates of facts. It means a single figure is not statistics. For
example, the national income of a country for a single year is not statistics but the same
for two or more years is statistics.
(ii) Statistics are affected by a number of factors. For example, sale of a product
depends on a number of factors such as its price, quality, competition, the income of
the consumers, and so on.
(iii)Statistics must be reasonably accurate.
• Wrong figures, if analyzed, will lead to erroneous conclusions.
• Hence, it is necessary that conclusions must be based on accurate figures.
(iv) Statistics must be collected in a systematic manner. If data are collected in a
haphazard manner, they will not be reliable and will lead to misleading conclusions.
(v) Collected in a systematic manner for a pre-determined purpose.
(vi) Statistics should be placed in relation to each other. If one collects data unrelated to
each other, then such data will be confusing and will not lead to any logical conclusions.
• Data should be comparable over time and over space.
TYPES OF DATA AND DATA SOURCES

• Statistical data are the basic raw material of statistics.

• Data may relate to an activity of our interest, a phenomenon, or a problem
situation under study.
• Statistical data, refers to those aspects of a problem situation that can be
measured, quantified, counted, or classified.
• Any phenomenon or activity that generates data through this process is termed
as a variable.
• In other words, a variable is one that shows a degree of variability when
successive measurements are recorded.
• In statistics, data are classified into two broad categories:
• Quantitative data and Qualitative data.
• This classification is based on the kind of characteristics that are measured.
Types of Data :
1. Quantitative Data:
• Quantitative data are those that can be quantified in definite units
of measurement.
• These refer to characteristics whose successive measurements yield
quantifiable observations.
• Depending on the nature of the variable observed for
measurement, quantitative data can be further categorized as
• continuous and discrete data.
• variable may be a continuous variable or a discrete variable.
(i) Continuous data
• A continuous variable is the one that can assume any value between any two points
on a line segment, thus representing an interval of values.
• The values are quite precise and close to each other, yet distinguishably different.
• All characteristics such as weight, length, height, thickness, speed,temperature, etc.,
represent continuous variables.
• It may be noted that a continuous variable assumes the maximum degree of
precision.
(ii) Discrete data are the values assumed by a discrete variable.
• A discrete variable is one whose outcomes are measured in fixed numbers.
• Such data are essentially count data.
• The number of customers visiting a departmental store everyday, the incoming
flights at an airport, and the defective items in a consignment received for sale, are
all examples of discrete data.
2. Qualitative data refer to the qualitative characteristics of a subject or an object.
• A characteristic is qualitative in nature when its observations are defined and noted
in terms of the presence or absence of a certain attribute in discrete numbers.
• These data are further classified as nominal and rank data.
(i) Nominal data are the outcome of classification into two or more categories of items
or units comprising a sample or a population according to some quality characteristic.
• Classification of students according to gender (as males and females), of workers according to
skill (as skilled, semi-skilled, and unskilled), and of employees according to the level of education
(as matriculates, undergraduates, and post-graduates), all result into nominal data.
• Given any such basis of classification, it is always possible to assign each item to a particular
class and make a summation of items belonging to each class. The count data so obtained are
called nominal data.
(ii) Rank data, on the other hand, are the result of assigning ranks to specify order in terms of the
integers 1,2,3, ..., n.
• Ranks may be assigned according to the level of performance in a test. a contest, a competition,
an interview, or a show.
• The candidates appearing in an interview, for example, may be assigned ranks in integers ranging
from I to n, depending on their performance in the interview.
Data sources are of two types
• Secondary and Primary.
• (i) Secondary data: They already exist in some form: published
or unpublished - in an identifiable secondary source.
• They are, generally, available from a published source(s), though
not necessarily in the form actually required.
• (ii) Primary data: Those data which do not already exist in any
form, and thus have to be collected for the first time from the
primary source(s).
• By their very nature, these data require fresh and first-time
collection covering the whole population or a sample drawn
from it.
TYPES OF STATISTICS
• There are two major divisions of statistics as descriptive statistics and
inferential statistics.
1. The term descriptive statistics deals with collecting, summarizing, and
simplifying data, which are otherwise quite voluminous. It seeks to achieve this
in a manner that meaningful conclusions can be readily drawn from the data.
• Descriptive statistics: comprising methods of bringing out and highlighting the latent
characteristics present in a set of numerical data.
• It not only facilitates an understanding of the data and systematic reporting
thereof in a manner; and also makes them available to further discussion,
analysis, and interpretations.
2. Inferential statistics use measurements from the sample of subjects in the
experiment to compare the treatment groups and make generalizations about
the larger population of subjects. 
 Scope of statistics
• It often becomes necessary to examine how two paired data sets are related. For
example, we may have data on the sales of a product and the expenditure incurred on
its advertisement for a specified number of years.
• Situations occur quite often when we require averaging (or totaling) of data on prices
and/or quantities expressed in different units of measurement. For example, price of
cloth may be quoted per meter of length and that of wheat per kilogram of weight.
Since ordinary methods of totaling and averaging do not apply to such price/quantity
data, special techniques needed for the purpose are developed under index numbers.
• It becomes necessary to examine the past performance of an activity with a view to
determining its future behavior. For example, when engaged in the production of a
commodity, monthly product sales are an important measure of evaluating
performance. This requires compilation and analysis of relevant sales data over time.
• Obtaining the most likely future estimates on any aspect(s) relating to a business or
economic activity has indeed been engaging the minds of all concerned. This is
particularly important when it relates to product sales and demand, which serve the
necessary basis of production scheduling and planning.
IMPORTANCE OF STATISTICS IN BUSINESS
• There are three major functions in any business enterprise in
which statistical methods are useful.
• (i) The planning of operations: This may relate to either special
projects or to the recurring activities of a firm over a specified
period.
• (ii) The setting up of standards: This may relate to the size of
employment, the volume of sales, fixation of quality norms for the
manufactured product, norms for the daily output, and so forth.
• (iii) The function of control: This involves comparison of actual
production achieved against the norm or target set earlier. In case
the production has fallen short of the target, it gives remedial
measures so that such a deficiency does not occur again.
LIMITATIONS OF STATISTICS
• There are certain phenomena or concepts where statistics cannot be
used
• Statistics reveal the average behavior, the normal or the general trend
• Since statistics are collected for a particular purpose, such data may not
be relevant or useful in other situations or cases.
• Statistics are not 100 percent precise as is Mathematics or Accountancy.
• In statistical surveys, sampling is generally used as it is not physically
possible to cover all the units or elements comprising the universe.
• A major limitation of statistics is that it does not reveal all pertaining to a
certain phenomenon
 Statistics – science or art?

• Statistics is both science and art.

• Statistical methods are systematic and have a general
application which makes it a science.
• Further, the successful application of these methods requires
skills and experience of using the statistical tools.
• These aspects make it an art.
Collection and presentation of data,

• As data are generally voluminous, they need to be put in a compact

and presentable form.
• The voluminous data collected could be made usable readily and are
easily comprehended.
• There are generally three forms of presentation of data:
1. Textual or Descriptive presentation
2. Tabular presentation
3. Diagrammatic presentation
1. TEXTUAL PRESENTATION OF DATA
• In textual presentation, data are described within the text.
• When the quantity of data is not too large this form of presentation is more suitable.
• Ex. In a bandh call given on 08 September 2005 protesting the hike in prices of petrol
and diesel, 5 petrol pumps were found open and 17 were closed whereas 2 schools
were closed and the remaining 9 schools were found open in a town of Bihar.
2.TABULAR PRESENTATION OF DATA
• In a tabular presentation, data are presented in rows and columns.
• Ex. Literacy level in rural and urban.

Gender Rural % Urban %

Male 79 90

Female 59 80
3. DIAGRAMMATIC PRESENTATION OF DATA
• This is the third method of presenting data.
• This method provides the quickest understanding of the actual situation
to be explained by data in comparison to tabular or text presentations.
• Diagrammatic presentation of data translates quite effectively the highly
abstract ideas contained in numbers into more concrete and easily
comprehensible form.
• Diagrams may be less accurate but are much more effective than tables
in presenting the data.
• There are various kinds of diagrams in common use.
(i) Geometric diagram (ii) Frequency diagram (iii) Arithmetic line graph
 I. Geometric Diagram
• Bar diagrams and pie diagrams come in the category of geometric diagram.
• The bar diagrams are of three types — simple, multiple, and component bar
diagrams.
a. Simple Bar: comprises a group of equispaced and equi width rectangular bars for each
class or category of data.
• Height or length of the bar reads the magnitude of data. The lower end of the bar
touches the base line such that the height of a bar starts from the zero unit.
• Bars of a bar diagram can be visually compared by their relative height and accordingly
data are comprehended quickly.
• Data for this can be of frequency or non-frequency type.
b. Multiple bar diagrams
• used for comparing two or more sets of data, for example income and
expenditure or import and export for different years, marks obtained
in different subjects in different classes, etc.
c. Component Bar Diagram
• Component bar diagrams or charts, also called sub-diagrams, are very useful in comparing the
sizes of different component parts (the elements or parts which a thing is made up of) and
also for throwing light on the relationship among these integral parts.
• For example, sales from different products, expenditure pattern in a typical Indian family
(components being food, rent, medicine, education, power, etc.), the budget outlay for
receipts and expenditures, components of the labor force, population, etc.
 c. Component diagram- Pie Diagram
• A pie diagram is also a component diagram, but unlike a bar diagram, here
it is a circle whose area is proportionally divided among the components it
represents.
• Pie charts usually are not drawn with absolute values of a category. The
values of each category are first expressed as percentage of the total value
of all the categories.
ii. Frequency Diagram
• Data in the form of grouped frequency distributions are generally
represented by frequency diagrams like histogram, frequency polygon,
frequency curve.
A. Histogram:
• In drawing the histogram of a given continuous frequency distribution we
first mark off along the x-axis all the class intervals on a suitable scale.
• On each class interval erect rectangles with heights proportionate to the
frequency of the corresponding class interval so that the area of the
rectangle is proportional to the frequency of the class.
• The diagram of continuous rectangles so obtained is called a histogram.
B. Frequency polygons gives an idea about the shape of the data and the
trends that a particular data set follows.
• It is usually drawn with the help of a histogram but can be drawn
without it as well.
 C. Frequency curve
• A Frequency Curve is a smooth curve which corresponds to the
limiting case of a histogram computed for a frequency
distribution of a continuous distribution as the number of data
points becomes very large.
d. Ogive
• An Ogive Chart is a curve of the cumulative frequency
distribution or cumulative relative frequency distribution.
• For drawing such a curve, the frequencies must be expressed
as a percentage of the total frequency.
• Then, such percentages are cumulated and plotted,
iii. Arithmetic line graph
• A graph showing arithmetic values of a variable is called
'arithmetic-line' graph.
• Often such graphs are constructed to present time series data, that
is, the data corresponding to different weeks, months or years.
• Therefore, arithmetic-line graphs are often called 'time series
graphs'.
 Sources and methods of data collection
• Sources of Data:
• Primary data:
• Secondary data
• Internal
• External
• Method of data collection
• Census method
• Sample technique
Methods of collecting primary data
A. Direct personal investigation
B. Indirect oral interviews
C. Information received through local agencies
D. Telephonic interview
E. Mailed questionnaire method
F. Schedules sent through enumerators
A) Direct personal investigation ●     Under this method, the investigator obtains the first-hand information
from the respondents themselves.
●     He personally visits the respondents to collect the information (data).

(B) Following are the merits of direct personal investigation:

(1) Reliable and Accurate ●     The data collected is first-hand and original in nature. So, it is more reliable
and accurate.
(2) Flexibility ●     In this method, the questions can be modified according to the level of the
respondent or other situations.

(3) Additional information ●     Some additional information may also be collected along with the required
information.
●     This additional information can be used in future investigations.

(C) Following are the demerits of direct personal investigation:

(1) Not suitable for a wide area ●     It is not suitable when the area of coverage is considerably wide.

(2) Time-consuming ●     This method is time-consuming as the investigator personally visits various
places and meets different people to collect information.

(3) Expensive ●     This method is expensive, particularly when the field of investigation is
large.
(4) Personal bias ●     The data collected in this method is subjected to personal bias.
(B) Indirect oral investigation Under this method, instead of directly approaching the
informants, the investigators interview several other
persons who are directly or indirectly in touch with the
informants.
(B) Following are the merits of indirect oral investigation:
(1) Wide coverage ●     A wide area can be brought under investigation
through this method.
(2) Economical ●     It is economical in terms of time, money, and
manpower.
(C) Following are the demerits of indirect oral investigation:
(1) Indirect information ●     Since the information is not collected directly from
the party, there is a possibility that it will not be fully
true.
(2) Lack of accuracy ●     As compared to direct personal investigation, the
degree of accuracy of the data is likely to be lower.
(3) Lack of uniformity ●     Information collected from different persons for the
same party may not be homogeneous and comparable.
(4) Possibility of biased information ●     Respondent/witness can modify the information
according to his personal interest.
(C) Information through Under this method, local agents or correspondents are appointed and
correspondents trained to collect the information from the respondents.

(B) Following are the merits of information through correspondents:

(1) Wide coverage ●     This method is useful where the field of investigation is very wide and
the information is to be collected from different parts of the country.

(2) Economical ●     This method is quite economical and time-saving.

(3) Suitable for special purposes ●     This method is suitable for some special purpose investigations.

(4) Continuity ●     It is very useful for collecting information on a regular basis.

(C) Following are the demerits of information through correspondents:

(1) Lack of uniformity ●     The information supplied by different correspondents often lacks
homogeneity; hence it is not comparable.

(2) Lack of reliability ●     Data obtained using this method may not be very reliable because of
the possibility of personal bias and prejudice of the enumerator.

(3) Less accuracy ●     This method cannot be used where a high degree of accuracy is
required.
(4) Costly ●     A lot of time and money is spent to collect the information through
correspondence.
(D) Telephonic interviews Under this method, data is collected through interviews over the
telephone.
(B) Following are the merits of telephonic interviews:

(1) Wide coverage ●     This method is useful where the field of investigation is very wide and the
information is to be collected from different parts of the country.
(2) Economical ●     This method is quite economical and time-saving.
(3) Reliability ●     The collected data is reliable as it is obtained directly from the party.
(C) Following are the demerits of telephonic interviews:

(1) Limited use ●     The disadvantage of this method is limited accessibility to people. This method
is not possible for people who do not own a telephone or mobile.
(2) Visual feedback is ●     Telephone interviews also obstruct visual reactions of the respondents, which
not possible become helpful in obtaining information on sensitive issues.
(E) Mailed ●     Under this method, a questionnaire containing a number of questions related to the
questionnaire investigation is prepared.
●     It is then sent to informants by post along with the instructions to fill.
method ●     The informants, after filling up the questionnaire, send it back to the investigator.
(B) Following are the merits of the mailed questionnaire method:
(1) Wide coverage ●     This method is useful where the field of investigation is very wide and the information is to
be collected from different parts of the country.
(2) Economical ●     This method is quite economical as it requires less money and labour.
(3) Originality ●     The data is very much original because informants are directly involved in the collection of
data.
(4) Free from bias ●     Every question is interpreted by the respondent in his own way. Hence, it is free from the
personal bias of the investigator.
(5) Maintains secrecy ●     This method is suitable for sensitive questions and maintains the anonymity of
respondents.
(C) Following are the demerits of the mailed questionnaire method:
(1) Limited scope ●     This method is applicable only where the respondents are educated.
(2) Less response ●     Most informants do not return the questionnaire.
●     The informants are least interested in the investigation; hence, there is a lack of response
from their side.
(3) Chance of ●     Informants may not understand the correct sense of some questions, and may not answer
misinterpretation them. Sometimes, informants may provide vague and ambiguous answers.
(4) Time-consuming ●     The process is time-consuming, particularly when the information is to be obtained by
post.
Schedules sent through enumerators
F) The schedule is generally filled out by the research worker or the enumerator,
who can interpret questions when necessary.
• To collect data through questionnaire is relatively cheap and economical, to
collect data through schedules is relatively more expensive, considerable
amount of money has to be spent in appointing enumerators and in imparting
training to them.
• Non-response is usually high in case of questionnaire. Non-response is
generally very low in case of schedules because these are filled by
enumerators
• In case of the questionnaire, it is not always clear as to who replies, but in
case of schedule the identity of respondent is known.
• Personal contact is generally not possible in case of the questionnaire method.
But in case of schedules direct personal contact is established with
respondents
Sources of Secondary data
• Secondary data means data that are already available i.e.,
they refer to the data which have already been collected and
analyzed by someone else.
• The secondary data collection involves less time, cost and
effort.
• Secondary data may either be published data or unpublished data.
•Usually published data are available in:
(a) various publications of the central, state are local governments;
(b) various publications of foreign governments or of international bodies and
their subsidiary organizations;
(c) technical and trade journals;
(d) books, magazines and newspapers;
(e) Reports and publications of various associations connected with business and
industry, banks, stock exchanges, etc.;
(f) reports prepared by research scholars, universities, economists, etc. in
different fields;
(g) public records and statistics, historical documents, and other sources of
published information.