Question 12.116

businessvalue

20. Measures of Business Value. The following table contains three measures of the value of a business: the market capitalization, the firm value, and the business enterprise value (in millions of dollars).

  1. Use one-way ANOVA to test, at level of significance , whether the population mean values differ among the three measures.
  2. Notice how much some of the larger firms (like Caterpillar) differ from some of the smaller firms (like Abercrombie & Fitch) for all three measures. This indicates that there is variability among the firms. Let us account for this variability by using the firms as blocks and testing, using the randomized block design at level of significance , whether the population mean values differ among the three measures.
  3. Did accounting for the variability among the firms help us to find significant differences among the three measures of firm value?
Market
cap		 Firm
value		 Enterprise
value
Abercrombie & Fitch 3.1 3.2 2.7
Caterpillar 36.3 71.9 69.1
CIGNA 10.0 12.1 10.7
Delta Air Lines 9.2 25.8 21.3
Nissan Motors 38.2 90.0 82.4
Repsol Petroleum 32.6 50.2 45.5
Table 12.42: Source: U.S. Federal Trade Commission, 2009.