FinSight, a SaaS finance platform, is training analysts to distinguish accounting profit from cash flow when evaluating business health. A small sample of monthly company records is used to test whether average monthly profit differs materially from average monthly operating cash flow.
A candidate claims that profit and cash flow are effectively the same in practice. Use the sample data below to test whether the mean monthly profit is different from the mean monthly operating cash flow for the same companies.
The table shows monthly values in $ thousands for 10 companies. Because both metrics are observed for the same company and month, this is a paired-sample problem.
| Company | Profit | Operating Cash Flow | Difference (Profit - Cash Flow) |
|---|---|---|---|
| 1 | 128 | 102 | 26 |
| 2 | 95 | 110 | -15 |
| 3 | 142 | 120 | 22 |
| 4 | 110 | 98 | 12 |
| 5 | 87 | 92 | -5 |
| 6 | 156 | 130 | 26 |
| 7 | 133 | 121 | 12 |
| 8 | 101 | 109 | -8 |
| 9 | 149 | 125 | 24 |
| 10 | 118 | 111 | 7 |
Assume the differences are approximately normally distributed. Test at a 5% significance level.