May I ask help my colleagues in the interpretation of this regression equation from the study -
Determinants of Profitability of the Local Businesses in Naga City: An Analysis of Relationship of the Business Profile and the Extent of Use of Social Media Zones
where
profitability = profitability ratio ( net income /sales)
x3 = number of times the page is followed
x4= number of times the page is shared
Your help will very much be appreciated. Thanks in advance.
51 is the profitability when X3 and X4 is zero or (ignored) .
0.0004 is the slope of curve and the change (increase) in profitability when X3 and X4 is increased by 1 unit.
In general, we can say the the equation has the form Y = a + bX + ϵ , where:
Y is the dependent variable
X is the independent variable
b is the slope of the line
a is the y-intercept
ϵ – residual (error)
Thank you sir Mahfuz. I wonder hop I can interpret the positive and negative coefficients of of X3 and X4 respectively.
According to my perception , as it is stated to be regression equation and and not ( equation of residuals), it has two independent variables say x1 and x2, the dependent variable is y with linear relationship. Therefore this equation portrays a plane of constant slope ( .0004) along x1 and x2 directions and has a negative intercept. That is if x1 and x2 are both zero, y ( profitability ) will have a value equal to 51.00 units. I gratefully acknowledge correction if I am wrong.
Thank you sir Jayaram. May I ask inputs on how to interpret the negative and positive coefficients??? (-0.0004 and 0.0004)
Possibly, that indicates the plane is descending in its gradient ( slope) along X1 and ascending along X2. Again , this is my perception. Excuse me if I am wrong and correct me. I am open to corrections.
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