Re: Performance of a blue-chip company over 6 years has been represented
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14 Jan 2024, 11:37
1. The highest profit comparative to revenue was in the year #6
Revenue to profit ratio means R:P that is, R/P. The first questions asks which year shows highest profit (P). That is, where P in R/P is highest, if in R/P, the denominator, which is P in this case is the highest, then the ratio will be the lowest. Thus, the lowest ratio is in year 6.
2. Profit to expense ratio is least in the year #4
Revenue - Expense = Profits, thus, E=R-P. The ratio we're looking for here is Profit to Expense which is P/(R-P). For this ratio to be the least numerator should be small and the denominator (R-P) should be big. For year 4, we see R/P is 3.15/1. Then R-P will be 3.15-1 = 2.15. Other years have R-P lesser than 2.15, thus, year 4 is the answer.