Formulas for cash flow and the ratio of debt to equity do not apply to

I feel gunned down when I see full underlined questions. ( Hate the poster too , just kidding )

I took a bit long ... but not 5 mins ... so here is my POE.

As I read the first option , came along "they". (Manhattan SC says it is one of the deadly pronouns ).

No clear referent, checked other options for they or them.
Eliminate A,B(formulas are growing),E(no clear referent).

Between C and D, eliminate C for improper usage of AS.

Ans: D

i am confused between C and D.

the modifier is perfect in C.

in D, 'them' is ambiguous.

but i feel D is better..
confused.. whats the OA ?

Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium.

A. Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium.
B. Because they are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses.
C. Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same applicability of formulas for cash flow and the ratio of debt to equity as established big businesses.
D. Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way as to established big businesses.
E. New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way as established big businesses, because they are growing and are seldom in equilibrium.

my doubt is in option D modifying phrase " because new businesses..." correctly modifies the following clause " formulas for cash.."
Is "them" refers to formulas.
please explain

Just to discuss the vexing pronoun reference of the them, if you have any doubt that them may refer to formulas, then just try to replace it with what you think might be correct.

(D) Because new small businesses are growing and are seldom-in equilibrium, formulas for cash flow, and the ratio of debt to equity do not apply to formulas in the same way as to establish big businesses.
Please ponder whether formulas will apply to formulas. New small businesses is the logical referent.

My 2 cents ..

The term - "because they are growing and are seldom in equilibrium" is clearly referring to "small businesses" therefore it must be touching it. In the original sentence it can easily be confused with big businesses i.e. big businesses are growing and are seldom in equilibrium.

Therefore A is wrong ..

B - Because they are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses.

B is suggesting that the formulas for cash flow are growing and are seldom in equilibrium. This is clearly not what the sentence is trying to imply ... (common sense) ...

B is incorrect ..

C - Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same applicability of formulas for cash flow and the ratio of debt to equity as established big businesses.

Clearly the mistake which dogged the statement A and B has been rectified here .. So C can be shortlisted ...

D - Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way as to established big businesses.

The same mistake that dogged A and B is now corrected in D , therefore we can shortlist it as a potential correct answer.

E - New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way as established big businesses, because they are growing and are seldom in equilibrium.

This passage again suggests that established big businesses are growing and seldom in equilibrium .. Therefore it is WRONG ..

We are down to 2 potentially correct choices C & D ...

Out of the two , I think that D delivers the message (that the author of the passage wants to deliver) better, and in a more simplistic form than C . There may well be a grammatical reason for why C is not correct but i have not been able to pin point it. I base my answer on simplicity and clarity..

I'm too late on this question. However it could help you. I could find a a clash between "C" and "D"..

In C, "as" is used to compare the 2 nouns (small and big business), which is wrong.
In D, "as" is used to compare the ways used in small and big business that makes it right.

Help me if I am wrong...

A) Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium. >> they referring back to Formulas or 'new small businesses'?? Also, it is wordy and unclear construction.
B) Because they are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses. >> by comma subject rule, they referring to formulas, this is wrong
C) Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same applicability of formulas for cash flow and the ratio of debt to equity as established big businesses. >> unclear and wordy construction
D) Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way as to established big businesses. >> clear and concise construction
E) New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way as established big businesses, because they are growing and are seldom in equilibrium. >> unclear and wordy construction. they referring to??

Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium.
(A) Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium. They is ambiguous
(B) Because they are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses. Modifier error
(C) Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same applicability of formulas for cash flow and the ratio of debt to equity as established big businesses. Comparison error
(D) Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way as to established big businesses. Correct
(E) New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way as established big businesses, because they are growing and are seldom in equilibrium They is ambiguous

No need to go beyond kicking out choices that have 'they', namely A, B, C, and E. One cannot decide, whether 'they' refers to big businesses or small businesses or formulas. D is the odd man out that doesn't use the dubious pronoun and one is justified in choosing D instantly.

Option A: Incorrect : 'They'.....can refer to various nouns such as, 'Formulas/new small businesses/established big businesses'. The closest noun is 'established big businesses'.For the context only 'new small businesses are growing and are seldom in equilibrium' makes sense.

Option B: Incorrect : 'They'..... refers to the subject of the main clause 'Formulas'. Grammatically 'formulas are growing and are seldom in equilibrium' is correct but quite illogical in meaning in this context.For the context only 'new small businesses are growing and are seldom in equilibrium' makes sense.

Option C: Incorrect : 'They'.....can refers to various nouns such as, 'Formulas/new small businesses/established big businesses'. The closest noun is 'established big businesses'.For the context only 'new small businesses are growing and are seldom in equilibrium' makes sense.

Option D: Correct :'Them'..... refers to the subject of the previous clause 'new small businesses'.The wat them is placed before introduction of the comparison, it naturally points to the 'NSB'. ''them' does not refer to 'formulas' as well as they are part of the same clause.

Option E: Incorrect : 'They'.....can refer to various nouns such as, 'Formulas/new small businesses/established big businesses'. The closest noun is 'established big businesses'.For the context only 'new small businesses are growing and are seldom in equilibrium' makes sense.

(A) Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium.

(B) Because they are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses.

(C) Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same applicability of formulas for cash flow and the ratio of debt to equity as established big businesses.

(D) Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way as to established big businesses.

(E) New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way as established big businesses, because they are growing and are seldom in equilibrium.


A, C, and E have pronoun ambiguity.

From C and D, D is better.

(A) Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because ((they)) are growing and are seldom in equilibrium. - the sentence has two plural nouns - formulas and businesses. Thus, it is not clear that to which one is "they" pointing to. Eliminate.

(B) Because ((they)) are growing and are seldom in equilibrium, ((formulas)) for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses. - can formulas grow ?? Nope. Meaning error. Eliminate.

(C) Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same ((applicability of formulas)) for cash flow and the ratio of debt to equity /as/ ((established big businesses.)) - apart from being a bit wordy, which is a secondary issue, the comparison between applicability of formulas in small businesses and established big business is incorrect. Eliminate

(D) Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way //as to// established big businesses. - pronoun ambiguity and comparison error both eliminated. Keep.

(E) New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way ((as)) established big businesses, because they are growing and are seldom in equilibrium. - same error as in C.

Thus, D is best.

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A – ‘they’ refers to formula, which garbles the sentence. A is wrong
B – Same as A
C – Changes meaning to imply that formulas do not apply to small businesses at all.
D – correct
E – Awkward

D is the right answer

Before we solve this question, let's first refresh two basic tenets in general 1. A pronoun cannot refer to two different entities in a sentence. 2. As a matter of style, a verb is preferred over a noun such as between 'apply' and 'applicability.'


A. Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium. -- The first 'they' refers to formulas while the second 'they' refers to small businesses.


B. Because they are growing and are seldom-in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses. -- In a reversal of roles, the first they refer to small new businesses while the second 'they' refers to formulas.

C. Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same applicability of formulas for cash flow and the ratio of debt to equity as established big businesses.-- The comparison is flawed because, here we are comparing how the small businesses are subject to something directly with established businesses and not how the latter are subject to.


D. Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way as to established big businesses.---- The preposition 'to' saves the day since the comparison is restored as applicability 'to ' small businesses is now compared to applicability 'to established businesses'. This is the correct choice

E. New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way as established big businesses, because they are growing and are seldom in equilibrium. --- Same problem of flawed compariosn as in C.

VeritasKarishma GMATNinja egmat please help with option C and E. I think there is no ambiguity in comparison. Isn't it clear that we are comparing the way formulas apply to new business vs big business.... the verb 'are' is ommitted from sentence and ellipses come into play

(C) and (E) have multiple irritants.

(C) - the use of "subject to the same applicability of formulas" is quite convoluted. Also, "are" before "established big businesses" would be good to have to ensure clear comparison.

(E) - the use of "subject to the same applicability of formulas" is quite convoluted. Use of "they" is ambiguous. Also, "are" before "established big businesses" would be good to have to ensure clear comparison.

Option (D) takes care of each of these problems and hence is a far better option.

(A) Formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses, because they are growing and are seldom in equilibrium.

Pronoun mistake “they”

(B) Because they are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to new small businesses in the same way as they do to established big businesses.
pronoun “they”

(C) Because they are growing and are seldom in equilibrium, new small businesses are not subject to the same applicability of formulas for cash flow and the ratio of debt to equity as established big businesses.
wrong use for “as”

(D) Because new small businesses are growing and are seldom in equilibrium, formulas for cash flow and the ratio of debt to equity do not apply to them in the same way as to established big businesses.

correct answer

(E) New small businesses are not subject to the applicability of formulas for cash flow and the ratio of debt to equity in the same way as established big businesses, because they are growing and are seldom in equilibrium.

wrong use for “as”