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11 Dec 2024, 01:30
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Difficulty:
25%
(medium)
Question Stats:
79% (01:43) correct
21%
(01:59)
wrong
based on 184
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A multinational electricity conglomerate, in its 2004 annual report, disclosed that four of its five divisions made a profit, an improvement over last year when only the European division had positive net income. The Chief Executive Officer claimed his new strategy, which involved exploiting previously untapped rural markets, is completely responsible for the improved financial performance.
Which of the following, if true, would most seriously weaken the CEO's explanation of the conglomerate's improved financial performance?
A. The electricity conglomerate opened over thirty-three new profitable offices in rural markets last year.
B. The company's urban markets did not experience substantial changes in terms of either revenues or costs.
C. The accounting department applied a new accounting regulation that includes as revenue transactions that previously would have not have been recorded until the following year.
D. There will be fewer layoffs at the unprofitable divisions because a new union contract allows the company to reduce wages by ten percent to alleviate financial constraints.
E. Five years ago, the company's five divisions all met or exceeded the average net income of the one hundred largest electricity companies.
Which of the following, if true, would most seriously weaken the CEO's explanation of the conglomerate's improved financial performance?
A. The electricity conglomerate opened over thirty-three new profitable offices in rural markets last year.
B. The company's urban markets did not experience substantial changes in terms of either revenues or costs.
C. The accounting department applied a new accounting regulation that includes as revenue transactions that previously would have not have been recorded until the following year.
D. There will be fewer layoffs at the unprofitable divisions because a new union contract allows the company to reduce wages by ten percent to alleviate financial constraints.
E. Five years ago, the company's five divisions all met or exceeded the average net income of the one hundred largest electricity companies.
Azakura16
Joined: 17 May 2024
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Location: United States (AR)
Schools: Booth '27 (I) LBS '26 (S) Said '27 (D)
GMAT Focus 1: 805 Q90 V90 DI90 
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11 Dec 2024, 09:58
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Quote:
A multinational electricity conglomerate, in its 2004 annual report, disclosed that four of its five divisions made a profit, an improvement over last year when only the European division had positive net income. The Chief Executive Officer claimed his new strategy, which involved exploiting previously untapped rural markets, is completely responsible for the improved financial performance.
Which of the following, if true, would most seriously weaken the CEO's explanation of the conglomerate's improved financial performance?
A. The electricity conglomerate opened over thirty-three new profitable offices in rural markets last year.
B. The company's urban markets did not experience substantial changes in terms of either revenues or costs.
C. The accounting department applied a new accounting regulation that includes as revenue transactions that previously would have not have been recorded until the following year.
D. There will be fewer layoffs at the unprofitable divisions because a new union contract allows the company to reduce wages by ten percent to alleviate financial constraints.
E. Five years ago, the company's five divisions all met or exceeded the average net income of the one hundred largest electricity companies.
Which of the following, if true, would most seriously weaken the CEO's explanation of the conglomerate's improved financial performance?
A. The electricity conglomerate opened over thirty-three new profitable offices in rural markets last year.
B. The company's urban markets did not experience substantial changes in terms of either revenues or costs.
C. The accounting department applied a new accounting regulation that includes as revenue transactions that previously would have not have been recorded until the following year.
D. There will be fewer layoffs at the unprofitable divisions because a new union contract allows the company to reduce wages by ten percent to alleviate financial constraints.
E. Five years ago, the company's five divisions all met or exceeded the average net income of the one hundred largest electricity companies.
Background info: Last year, only the European division of a multinational electricity conglomerate made a profit.
Background info: This year, 4 out of 5 of the conglomerate’s divisions were profitable.
Premise: The CEO recently implemented a new strategy which involved exploiting previously untapped rural markets.
Conclusion: The CEO believes that his new strategy is completely responsible for the improved financial performance.
We’re looking to weaken the argument.
A. This strengthens his conclusion. If they opened a bunch of new offices in rural areas, per his plan, and the offices are profitable, then his new strategy looks effective.
B. This is tempting, but it doesn’t offer an alternative explanation for the improved financial situation. The CEO’s plan could still be responsible for the increased profits.
C. This weakens the argument. If these transactions wouldn’t have been shown until next year before the new accounting regulation was implemented, then that artificially inflates this year’s revenue. Even if the CEO's new strategy was still helpful, it wasn't completely responsible.
D. Irrelevant. We’re concerned with the present balance sheet, not potential future layoffs at unprofitable divisions.
E. Irrelevant. We’re talking about the difference between this year and last year. Five years ago is out of the scope of this argument.
Best answer is C.
12 Dec 2024, 09:09
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Hi Azakura16
Quote:
A multinational electricity conglomerate, in its 2004 annual report, disclosed that four of its five divisions made a profit, an improvement over last year when only the European division had positive net income. The Chief Executive Officer claimed his new strategy, which involved exploiting previously untapped rural markets, is completely responsible for the improved financial performance.
Which of the following, if true, would most seriously weaken the CEO's explanation of the conglomerate's improved financial performance?
A. The electricity conglomerate opened over thirty-three new profitable offices in rural markets last year.
B. The company's urban markets did not experience substantial changes in terms of either revenues or costs.
C. The accounting department applied a new accounting regulation that includes as revenue transactions that previously would have not have been recorded until the following year.
D. There will be fewer layoffs at the unprofitable divisions because a new union contract allows the company to reduce wages by ten percent to alleviate financial constraints.
E. Five years ago, the company's five divisions all met or exceeded the average net income of the one hundred largest electricity companies.
Which of the following, if true, would most seriously weaken the CEO's explanation of the conglomerate's improved financial performance?
A. The electricity conglomerate opened over thirty-three new profitable offices in rural markets last year.
B. The company's urban markets did not experience substantial changes in terms of either revenues or costs.
C. The accounting department applied a new accounting regulation that includes as revenue transactions that previously would have not have been recorded until the following year.
D. There will be fewer layoffs at the unprofitable divisions because a new union contract allows the company to reduce wages by ten percent to alleviate financial constraints.
E. Five years ago, the company's five divisions all met or exceeded the average net income of the one hundred largest electricity companies.
Background info: Last year, only the European division of a multinational electricity conglomerate made a profit.
Background info: This year, 4 out of 5 of the conglomerate’s divisions were profitable.
Premise: The CEO recently implemented a new strategy which involved exploiting previously untapped rural markets.
Conclusion: The CEO believes that his new strategy is completely responsible for the improved financial performance.
We’re looking to weaken the argument.
A. This strengthens his conclusion. If they opened a bunch of new offices in rural areas, per his plan, and the offices are profitable, then his new strategy looks effective.
B. This is tempting, but it doesn’t offer an alternative explanation for the improved financial situation. The CEO’s plan could still be responsible for the increased profits.
C. This weakens the argument. If these transactions wouldn’t have been shown until next year before the new accounting regulation was implemented, then that artificially inflates this year’s revenue. Even if the CEO's new strategy was still helpful, it wasn't completely responsible.
D. Irrelevant. We’re concerned with the present balance sheet, not potential future layoffs at unprofitable divisions.
E. Irrelevant. We’re talking about the difference between this year and last year. Five years ago is out of the scope of this argument.
Best answer is C.
