Performance of a blue-chip company over 6 years has been represented

Question

Source: e-GMAT

Performance of a blue-chip company over 6 years has been represented in the chart below. Each circle indicates ratio of Revenue to Profit (value mentioned in the circle). The horizontal axis shows profits.

1. The highest profit comparative to revenue was in the year .

2. Profit to expense ratio is least in the year .

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Dropdown 1: 6 Dropdown 2: 4

Malar95 · Answer

Each circle indicates ratio of Revenue to Profit (value mentioned in the circle).  
1. Y6 -Im reversing it the above line and picking the lowest value since the Q asks for profit to revenue
2. Y4 - Higher revenue to profit, lower profit to expense thus highest value here

zlishz · Answer

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.

HarshZsssh · Answer

can anybody simplify this questions

Nikkz99 · Answer

Circles represent -> Revenue to Profit Ratio

Revenue generally -> Price * Quantity
(So basically, Profit is part of Price)

For example,

Let's say => Price of a quantity is $10 such that ($8 -> Making cost + transport fee + other expense ; $2 -> Profit)

So, Revenue to Profit ratio in this case is 10/2 => 5
Basically, higher the ratio lower the fraction of profit in the given revenue.

If we consider Profit : Expense ratio -> 2/8 => 1/4 or 0.25

For Q1, Need to pick the highest profit : revenue -> i.e lowest value in the given chart. i.e Year 6
For Q2, Need to pick profit : expense ratio -> the highest ratio of Revenue to Profit i.e Year 4

Hope it helps : )

kovid231 · Answer

let me simplify:

Main thing to remember = 
P=R-E

q1 asks for: highest P:R ratio, 
but we are given R : P ratios.
So if we flip the ratio which will be largest value. hence take all values and use them in denominator with 1 in numerator (since 1/(R/P) would give P:R).
hence, largest would be the smallest value in denominator, that would be 1.05.

Q2: Least P:E ratio.
We are not given E, but we know P=R-E. hence E=R-P
hence P/E becomes P/R-P

We know R/P=x (these are all values given in the graph).
hence R=Px. (use this in place of R.)

To find: P/R-P => P/Px-P => 1/x-1 (final equation)
To find the least value would mean largest denominator, that would mean getting the larger score here such that even if we subtract 1 from it, it will still have the largest impact. hence, 3.15 would be the answer.

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