Three students, Linda, Tuan, and Javier, are given laboratory rats for a nutritional experiment. Each rat's weight is recorded in grams. Linda feeds her rats Formula A, Tuan feeds his rats Formula B, and Javier feeds his rats Formula C. At the end of a specified time period, each rat is weighed again, and the net gain in grams is recorded. Using a significance level of 0.05, test the hypothesis that the three formulas produce the same mean weight gain.
H0: μ1 = μ2 = μ3
Ha: At least two of the means differ from each other
Formula A Formula B Formula C
43 32.9 46.7
35.2 18.8 49.3
49.9 58.5 38.5
59.3 16.2 45.4
55.6 32 49.9
53.6 40.2 55.9
45 43 42.2
50.8 39.2 48.5
41.9 54.9 53.4
Run a one-factor ANOVA with
α = 0.05. Report the F-ratio to 4 decimal places and the p-value to 4 decimal places.
F =
p-value =
Based on the p-value, what is the conclusion
Reject the null hypothesis: at least one of the group means is different
Fail to reject the null hypothesis: not sufficient evidence to suggest the group means are different
CASE 2.5 Ethics and Window Dressing LO2-4
The date is November 15, current year. You are the chief executive officer of Omega Software, a publicly owned company that is currently in financial difficulty. Omega needs new large bank loans if it is to survive.
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You have been negotiating with several banks, but each has asked to see your current year financial statements, which will be dated December 31. These statements will, of course, be audited. You are now meeting with other corporate officers to discuss the situation, and the following suggestions have been made:
1. "We are planning to buy WordMaster Software Co. for $5 million cash in December. The owners of WordMaster are in no hurry: if we delay this acquisition until January, we'll have $5 million more cash at year-end. That should make us look a lot more solvent."
2. "At year-end, we'll owe accounts payable of about $5 million. If we were to show this liability in our balance sheet at half that amount, say $2.5 million, no one would know the difference. We could report the other $2.5 million as stockholders' equity."
3. "We owe Delta Programming $5 million, due in 90 days. I know some people at Delta. If we were to sign a note and pay them 10 percent interest, they'd let us postpone this debt for a year or more."
4. "We own land that cost us $2 million but today is worth at least $6 million. Let's show it at $5 million in our balance sheet, and that will increase our total assets and our stockholders' equity by $4 million."
Instructions
Separately evaluate each of these four proposals to improve Omega Software's financial statements. Your evaluations should consider ethical and legal issues as well as accounting issues.
