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# Company X experienced a sharp decrease

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Manager
Joined: 03 Jul 2014
Posts: 57
Concentration: Operations, General Management
WE: Engineering (Energy and Utilities)
Company X experienced a sharp decrease  [#permalink]

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13 Apr 2016, 22:03
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Difficulty:

25% (medium)

Question Stats:

73% (01:18) correct 27% (01:32) wrong based on 460 sessions

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Company X experienced a sharp decrease in profitability last year. The CEO believes that the best way to increase profitability is to fire 20 employees. The CFO, on the other hand, believes that no employees should be fired, but that all employees should take a salary cut.

Which of the following, if true, would contribute most to the CFO's claim?

A. There are currently 35 employees in Company X.
B. Firing 20 employees will lower the company's expenses by more than 30 percent.
C. The average salary in Company X is significantly lower than that of its competitors.
D. The workload in Company X has been gradually increasing over the past few years.
E. If salaries are lowered, employee morale and, consequently, productivity will suffer.

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Re: Company X experienced a sharp decrease  [#permalink]

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13 Apr 2016, 22:31
1
prasadyanz wrote:
Company X experienced a sharp decrease in profitability last year. The CEO believes that the best way to increase profitability is to fire 20 employees. The CFO, on the other hand, believes that no employees should be fired, but that all employees should take a salary cut.

Which of the following, if true, would contribute most to the CFO's claim?

A. There are currently 35 employees in Company X.
B. Firing 20 employees will lower the company's expenses by more than 30 percent.
C. The average salary in Company X is significantly lower than that of its competitors.
D. The workload in Company X has been gradually increasing over the past few years.
E. If salaries are lowered, employee morale and, consequently, productivity will suffer.

Premise: Company has experienced a decrease in profitability
CEO's belief: Fire 20 employees to increase profitability
CFO's belief: All employees should take a salary cut.

We need to support the CFO's claim and refute the CEO's claim.
If we show that firing the employees might have a negative effect, then our job is done.
Option D says just the same. There is already an increasing work load and firing people will increase it even more. This might not be beneficial for the company.

Correct Option: D
Manager
Joined: 19 Jan 2016
Posts: 71
Location: India
Concentration: Strategy
Re: Company X experienced a sharp decrease  [#permalink]

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13 Apr 2016, 22:32
Which of the following, if true, would contribute most to the CFO's claim?
Goal: Strengthen the CFO claim that employee should be not fired.
Pre-thinking: Company will not be able to handle the existing workload with reduced workforce and result in more loss.

Answer D says the that workload will increase. So, we need employee to run the business.
Director
Joined: 24 Nov 2015
Posts: 515
Location: United States (LA)
Re: Company X experienced a sharp decrease  [#permalink]

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14 Apr 2016, 13:59
After initial read there seems a to be a slight confusion,but after a through reading we get the correct answer as option D
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Joined: 12 Dec 2016
Posts: 1608
Location: United States
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Re: Company X experienced a sharp decrease  [#permalink]

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23 Nov 2017, 22:09
I have searched for reviews on contents of questions from Economist Gmat, but the result is negative. There are no reviews; people only discuss about Tutor of Economist gmat.

I believe most of questions from Economist Gmat do not look like gmat-like questions.
Intern
Joined: 08 Mar 2017
Posts: 49
Location: India
Concentration: Operations, General Management
Schools: ISB '20, XLRI"20
GMAT 1: 600 Q40 V33
GPA: 2.79
WE: Project Management (Manufacturing)
Re: Company X experienced a sharp decrease  [#permalink]

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25 Nov 2017, 05:20
prasadyanz wrote:
Company X experienced a sharp decrease in profitability last year. The CEO believes that the best way to increase profitability is to fire 20 employees. The CFO, on the other hand, believes that no employees should be fired, but that all employees should take a salary cut.

Which of the following, if true, would contribute most to the CFO's claim?

A. There are currently 35 employees in Company X.- not conclusive data
B. Firing 20 employees will lower the company's expenses by more than 30 percent.- Strengthening CEO claim
C. The average salary in Company X is significantly lower than that of its competitors.-Already lower salary means it will not be reducing expenses possible weakener
D. The workload in Company X has been gradually increasing over the past few years. --Correct Workload increase means firing employees may lower productivity/profitability
E. If salaries are lowered, employee morale and, consequently, productivity will suffer.
- Weakener

CEO- Firing 20 employees
CFO- salary cut.
Answer should justify CFO claim or weakens the CFO claim, D is the answer
Intern
Joined: 02 Jul 2017
Posts: 2
Re: Company X experienced a sharp decrease  [#permalink]

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27 Nov 2017, 08:34
1
Company X experienced a sharp decrease in profitability last year. The CEO believes that the best way to increase
profitability is to fire 20 employees. The CFO, on the other hand, believes that no employees should be fired, but that
all employees should take a salary cut.

Which of the following, if true, would contribute most to the CFO's claim?

A. There are currently 35 employees in Company X.
{incorrect: as per CEO, we fire 20 employees, then only 15 is left, but we don't know whether remaining 15 employees are
sufficient.}

B. Firing 20 employees will lower the company's expenses by more than 30 percent.
{incorrect: don't know whether 30 percent decreased expenses is sufficient to increase profitability}

C. The average salary in Company X is significantly lower than that of its competitors.
{incorrect: avg salary is already lower than competitors and salary cut will hurt even more}

D. The workload in Company X has been gradually increasing over the past few years.
{correct: workload is increasing, with 20 employees fired, workload will increase even more. Hence CFO's claim is better}

E. If salaries are lowered, employee morale and, consequently, productivity will suffer.
{incorrect: if productivity suffers, then profitability will decrease, not increase}
VP
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Joined: 13 Apr 2013
Posts: 1363
Location: India
Concentration: International Business, Operations
GMAT 1: 480 Q38 V22
GPA: 3.01
WE: Engineering (Consulting)
Re: Company X experienced a sharp decrease  [#permalink]

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15 Apr 2018, 21:43
prasadyanz wrote:
Company X experienced a sharp decrease in profitability last year. The CEO believes that the best way to increase profitability is to fire 20 employees. The CFO, on the other hand, believes that no employees should be fired, but that all employees should take a salary cut.

Which of the following, if true, would contribute most to the CFO's claim?

We need to strengthen the CFO's claim.

A. There are currently 35 employees in Company X. Irrelevant

B. Firing 20 employees will lower the company's expenses by more than 30 percent. Strengthening CEO's claim

C. The average salary in Company X is significantly lower than that of its competitors. Irrelevant

D. The workload in Company X has been gradually increasing over the past few years. Strengthening CFO's claim

E. If salaries are lowered, employee morale and, consequently, productivity will suffer. Weakening CFO's claim

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Re: Company X experienced a sharp decrease &nbs [#permalink] 15 Apr 2018, 21:43
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# Company X experienced a sharp decrease

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