Journalist: Workers at Facsum Inc. have threatened to strike if manage

Question

Journalist: Workers at Facsum Inc. have threatened to strike if management does not meet their demands for an immediate 5% pay raise and a paid lunch break. Further, workers are insisting that the company rehire 12 employees who were laid off for complaining about substandard wages and working conditions. It is well-known that Facsum reported that negative profits in 3 of its previous 4 quarterly earnings reports. We believe a strike is inevitable.

Identify an assumption required by the journalist’s argument and a fact that, if true, would most strongly support the required assumption. Make only two selections, one in each column.

KarishmaB · Accepted Answer

Focus on the assumption only first.

Workers at Facsum Inc. have threatened to strike if management does not meet their demands for a raise. 
Further, workers are insisting that the company rehire 12 employees who were laid off.
It is well-known that Facsum reported that negative profits in 3 of its previous 4 quarterly earnings reports.

Conclusion:We believe a strike is inevitable.

On what basis is the author concluding that a strike is inevitable? The premise states that Facsum reported negative profits. He is assuming that there are no resources from which raise can be paid. There is no mention of unwillingness of the management. The premise mentions the financial condition. The argument talks about the ability of Facsum to give raises. Not about their willingness.

So, "Fascum is unwilling to negotiate with the workers." is not an assumption the author is making. It is not necessary that Facsum is unwilling to negotiate. It may be willing or may not be willing but the point is that it doesn't have the capacity to give a raise.

That is why the correct set is:
Assumption: Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses.
Supporting Fact: The majority of the losses were due to a significant decline in profit margins.

If profit margins have declined, it becomes likely that Facsum does not have sufficient cash flow or cash reserves.

Apt0810 · Answer

Assumption which supports the conclusion that strike is inevitable is:Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses, so it will not be able to except the demands put forward by the workers

Supporting fact:The majority of the losses were due to a significant decline in profit margins,since if it doesn't have proper money from the profits ,the company won't be able to to increase the pay of workers

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mimishyu · Answer

see the structure of the question stem:

workers threaten to strike if the demand for pay wage raise and paid lunch break cannot reach
……but Fascum’s report negative profit…..thus strike inevitable

some additional informations to know:
(1)In an argument, an assumption is a premise that is not explicitly(directly)stated. These unstated premises are very important since “the validity of an argument is determined by the validity of its assumptions”. Assumptions are the missing links of arguments.

(2)an assumption is an unexamined belief: what we think without realizing we think it. Our inferences(also called conclusions)are often based on assumptions that we haven’t thought about critically. A critical thinker, however, is attentive to these assumptions because they are sometimes incorrect or misguided.

the argument of Journalist:
 the strike, which appeal for pay-rise and paid lunch break, to the management of Fascum must be inevitable since the tricky problem of negative profit earnings remain

the strike, which appeal for pay-rise and paid lunch break, must be inevitable-->>this is the conclusion( to the argument)

must be->>this is the key point to which the argument be valid or not

the tricky problem of negative profit earnings remain->>this is a phenomenon used for explain the assumption, its 
focus revolves around the issue to profit-money, and if this assumption valid, then the conclusion as well as the whole argument could be valid too 
and we browse through sentence (1)-(6), only (4)&(6) talks about money, here we want to find assumption, in (4)—were due to—cannot be the wording show up in assumption, thus only (6) somewhat more corresponsive to “the tricky problem of negative profit earnings remain”

or we could find assumption, which the argument based upon, by using “elimination method”

sentence (1): this statement oppose to Journalist’s argument, the worker won’t compromise

sentence(2):there’s nowhere in the passage that we saw the word “leader” ever show up

sentence(3):the statement in question stem doesn’t mention “negotiate” very specifically, it just says “rehire 12 employees….” which we can infer from the Journalist’s tone that he/she is somehow willing to negotiate

sentence(5):here we’re not concerned about the reason why 12 employees layoff, the question stem only says that the company rehire 12 employees who were laid off…

sentence (6):workers at Fascum threaten to strike if management cannot meet their demand--but why cannot meet their demand?-here we had to pick a choice which could best explain this doubt, and though (4) mention about profit losses, its wording “were due to”(it can only be a fact) cannot appear in the assumption kind of sentence, thus only (6) fits best

Cellchat · Answer

Why is the supporting fact not 6?

Is it because it is not a fact as it states 'likely'?

Mkerolos · Answer

How can I tell if an IRnquestion is MSR/GI/TPA/TA? Would this be table analysis?

Sajjad1994 · Answer

Practice a bunch of IR questions and you will find the difference between the questions until then you can see the tags given with each question. This is a two part analysis question. See the screen shot. 123.jpg Thank you

kntombat · Answer

Assumption is Statement 6: Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses, if this is negated then the argument falls apart.

Supporting statement for this Assumption is=: The majority of the losses were due to a significant decline in profit margins. This is the only option that can be considered as a supporting statement became the reason for the decline in profit margins is the increase in expenses as stated by our the assumption.

GMATist1 · Answer

mimishyu 
Why can't the assumption be:
Fascum is unwilling to negotiate with the workers.

and the supporting fact be:
Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses.

BLTN · Answer

VeritasKarishma 
Dear Karishma,
could you shed some light, why the following combination is not valid?

Conclusion  : We believe a strike is inevitable.
Why ?
 Assumption : Fascum is unwilling to negotiate with the workers.
Why?
 Supporting fact : Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses.

Thank you in advance.

mpobisetty · Answer

I also have the same question, because if we negate this assumption (Fascum  is  willing to negotiate with the workers), then the conclusion (that a strike is inevitable) is no longer valid.

isn't this how assumptions are supposed to be tackled?

GMATGuruNY   GMATNinja  please help.

GMATGuruNY · Answer

As you have correctly noted, the negation of the correct answer must invalidate the conclusion.

PREMISE:
If management does not meet their demands, workers have threatened to strike.
CONCLUSION:
A strike is inevitable.

The premise indicates the following:
To avoid a strike, Facsum must meet the workers' demands.

C, negated:
 Facsum is willing to negotiate with the workers. 
Here, the usage of  negotiate  suggests that Facsum might meet some but not all of the workers' demands, potentially STRENGTHENING the conclusion that a strike is inevitable.
Since the negation of the correct answer must clearly WEAKEN the conclusion, eliminate C.

F, negated:
 Facsum likely has sufficient cash flow to support increased expenses. 
This negation suggests that Facsum can afford to meet the workers' demands, WEAKENING the conclusion that a strike is inevitable.
Since the negation of F weakens the conclusion, F is a valid assumption.

sayan640 · Answer

KarishmaB  , I also have similar questions. Can you please help ?  chetan2u

Why can't the assumption be:
Fascum is unwilling to negotiate with the workers.

and the supporting fact be:
Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses.

Nidhibatra · Answer

can someone please shed light on why supporting fact is "decline in profit margin", why couldn't it be "unwillingness"?

PReciSioN · Answer

GMATNinja   KarishmaB , Is F really required to make this argument? It could be very well be that Fascum has the cash reserves, but is still unwilling to negotiate with the workers given the recent losses it has made.

More importantly, how does D support this assumption even in the slightest? Whether the losses are due to a low profit margin or any other reason is irrelevant. We already know that the losses were there. The reason for the losses doesn't seem to support F at all.

KarishmaB · Answer

We need an assumption required by the journalist in his argument. What is he assuming? Is he assuming that Facsum is unwilling to negotiate with the workers? Facsum's willingness is not even a part of his argument. He is only talking about the financial angle so any assumptions he made were towards the financial angle. 
Only (F) and (D) work as a pair.

(F) Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses.

(D) The majority of the losses were due to a significant decline in profit margins.

A decline in profit margin is an indicator of money troubles. For example, if the company wrote off some big receivables, then the company profit could dip in some quarters even if it has cashflows overall. A significant decline in profit margins indicates bigger trouble.

Gemmie · Answer

Assumption: "Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses."

This assumption suggests that Facsum's financial situation is so strained that the company cannot afford to meet the workers' demands (e.g., a 5% pay raise and rehiring laid-off employees). If this is true, it makes the strike more likely because the company would be unable to satisfy the workers' demands, leading to a deadlock.

Supporting Fact: "The majority of the losses were due to a significant decline in profit margins."

If most of Facsum's recent financial losses are due to a significant decline in profit margins, it suggests that the company is struggling financially. Declining profit margins typically mean that a company is earning less money on its sales, which can lead to cash flow problems. If Facsum's profit margins are shrinking, it's likely that the company doesn’t have enough cash reserves or ongoing cash flow to handle additional expenses like higher wages or rehiring laid-off workers.

boybread5 · Answer

KarishmaB , why can't the assumption and supporting fact be flipped? That's what I'm still scratching my head on.

cheshire · Answer

You have to think of it in a cause and effect sort of way.

Because they had lower profit margins -> they do not have sufficient cash flow.
Not having sufficient cash flow does not lead to lower profit margins, however.

The statement: " Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses" is inherently not a fact just in it's unsure nature, and rather something that would require supporting evidence.

Journalist: Workers at Facsum Inc. have threatened to strike if manage

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Assumption	Supporting Fact
		The workers would likely be willing to compromise with respect to the paid lunch break.
		When the leaders of a union call for a strike, the members inevitably vote to strike.
		Facsum is unwilling to negotiate with the workers.
		The majority of the losses were due to a significant decline in profit margins.
		The 12 laid-off employees were not laid off for any performance-related reasons.
		Facsum likely does not have sufficient cash flow or cash reserves to support increased expenses.

GMAT Two-part Analysis (TPA) Questions

Journalist: Workers at Facsum Inc. have threatened to strike if manage

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