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Why is the supporting fact not 6?

Is it because it is not a fact as it states 'likely'?
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How can I tell if an IRnquestion is MSR/GI/TPA/TA? Would this be table analysis?
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How can I tell if an IRnquestion is MSR/GI/TPA/TA? Would this be table analysis?

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.
Attachment:
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123.jpg [ 421.57 KiB | Viewed 9225 times ]

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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.
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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.
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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.
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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.

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.
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GMATist1
Why can't the assumption be:
Fascum is unwilling to negotiate with the workers.
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.
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GMATist1
Why can't the assumption be:
Fascum is unwilling to negotiate with the workers.
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?

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