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# Corporate Officer: Last year was an unusually poor one for

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Director
Joined: 19 Nov 2004
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Corporate Officer: Last year was an unusually poor one for [#permalink]

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16 Feb 2005, 20:32
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Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporationâ€™s profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger: it contributed 45 percent of the corporationâ€™s profits, up from 20 percent the previous year.
On the basis of the facts stated, which of the following is the best critique of the evidence presented above?
(A) The increase in the pharmaceutical divisionâ€™s contribution to corporation profits could have resulted largely from the introduction of single, important new product.
(B) In multidivisional corporations that have pharmaceutical divisions, over half of the corporationâ€™s profits usually come from the pharmaceuticals.
(C) The percentage of the corporationâ€™s profits attributable to the pharmaceutical division could have increased even if that divisionâ€™s performance had not improved.
(D) The information cited does not make it possible to determine whether the 20 percent share of profits cited was itself an improvement over the year before.
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.

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16 Feb 2005, 20:42
B directly attacks the claim that the pharmaceutical division's results are encouraging because the latter did not even reach the 50% profit usual for companies with such a division.
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Paul

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16 Feb 2005, 20:49
Like Paul said B

B implies that the results of the Pharmacutical unit is actually subpar compared to other similar companies which have profits in the range of 50%.
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17 Feb 2005, 01:34
hmmm....B was actually the first i knocked off my scratch paper. i was almost stuck bw C and E.

My choice is C.

My thoughts:

If the company's profits fell in the new year, and the revenue of the pharmaceutical section remained the same (no improvement), then the % contribution of the pharma. section will be higher, making it seem as if the pharma. unit became stronger.
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17 Feb 2005, 01:40
(B). If most corporations are havign 50% of their profits attributed to their pharmaceutical division, then there is nothign encouraging about having 45% attributed to this corporate's profits.
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17 Feb 2005, 06:26
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I will go with 'C'

Say for example the corporation was making 100 million - Traditional split would have been 60 million from chemical division and 20 million from pharmaceutical division and the other 20 from a different division.
If the chemical division contributed only 40 million, the pharmaceutical division contributing the regular 20 million and the other division contributing another 20 million will bring the pool to 80 million, so now the pharma division has contributed 25% instead of the regular 20% - this does not mean that the pharma division is getting stronger becos the pool has become smaller it looks like the pharma division has improved but in reality it is not.
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17 Feb 2005, 07:48
My choice is (C).

(B) talks about other companies in general. The argument is saying that the pharmaceutical division is growing. It is not saying it the greatest in general when compared to the industry as such.

If the contribution of the chemical divison goes down significantly and the contribution of pharmaceutical division remains same then it could be a major portion of total contribution.
For example:
contribution of chemical division is $600 (60%) contribution of pharmaceutical division is$400 (40%)

Later

chemical division = $200 (33%) pharma division =$400 (66%)

Here the contribution of pharma has increased from 40% to 66% though its contribution has not changed in terms of actual money.
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17 Feb 2005, 07:53
anandnk and rthothad, I perfectly agree. One of those percentage/number traps
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Paul

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17 Feb 2005, 09:32
Yup C it is. Good job folks.

I got this one wrong.
Self note:need to watch out for percentage and proportions.
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09 Apr 2005, 11:47
Corporate Officer: Last year was an unusually poor one for our chemical division, which has traditionally contributed about 60 percent of the corporationâ€™s profits. It is therefore encouraging that there is the following evidence that the pharmaceutical division is growing stronger: it contributed 45 percent of the corporationâ€™s profits, up from 20 percent the previous year.
On the basis of the facts stated, which of the following is the best critique of the evidence presented above?
(A) The increase in the pharmaceutical divisionâ€™s contribution to corporation profits could have resulted largely from the introduction of single, important new product.
(B) In multidivisional corporations that have pharmaceutical divisions, over half of the corporationâ€™s profits usually come from the pharmaceuticals.
(C) The percentage of the corporationâ€™s profits attributable to the pharmaceutical division could have increased even if that divisionâ€™s performance had not improved.
(D) The information cited does not make it possible to determine whether the 20 percent share of profits cited was itself an improvement over the year before.
(E) The information cited does not make it possible to compare the performance of the chemical and pharmaceutical divisions in of the percent of total profits attributable to each.

PLEASE REFUTE E,,,i guess this is the answer,,,,but the OA i have is different!
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i hate when people do'nt post the OA, it leaves in guessing!!!!

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Re: Corporate Officer: Last year was an unusually poor one for [#permalink]

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14 Oct 2013, 09:37
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Corporate Officer: Last year was an unusually poor one for   [#permalink] 14 Oct 2013, 09:37
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