Measuring the performance of British business in Asia from the late 18

Question

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Passage # 354, Date : 26-Sep-2019
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Measuring the performance of British business in Asia from the late 1800s to the present is difficult. Profits Offer one measure, but collecting and comparing the profits and dividends (shares of profits distributed to stockholders) of thousands of enterprises present problems of data and interpretation. British overseas banks, for example, all maintained large hidden reserves to which transfers were made before published profits were declared. The actual dividends paid to stockholders were subject to factors such as taxation policy or exchange fluctuations or other factors. For example, the high dividends paid in India by many British managing companies in the early 1920s were more a response to stockholders' demands for short-term profit-taking of earnings the companies had retained from the First World War years—coupled with low rates of dividend taxation in India and a highly favorable currency exchange rate for the Indian rupee against British sterling—than the result of spectacularly successful enterprise during the period 1919 to 1921. Comparisons between different industries in different Asian countries present further difficulties.

Perhaps a more satisfactory measure of business performance is market share. In the late 1800s, British enterprise was dominant in many Asian countries; in Iran as late as the 1920s, the entire modern business sector was under British control. Although it declined at different rates in different countries, by the 1980s British business no longer played such a central role in the market of any Asian country.

Perhaps a more satisfactory measure of business performance is market share. In the late 1800s, British enterprise was dominant in many Asian countries; in Iran as late as the 1920s, the entire modern business sector was under British control. Although it declined at different rates in different countries, by the 1980s British business no longer played such a central role in the market of any Asian country.   1 
 D 
 1. The author of the passage mentions reserves in British overseas banks most likely in order to

(a) point out that published profits are less useful in measuring business success than are dividends 
(b) suggest that many British businesses in Asia were less successful than their published profits indicated 
(c) indicate that data about the profits of various businesses provide more useful information about short-term than about long-term performance
(d) illustrate the difficulties in drawing conclusions about business success or failure from published profits 
(e) explain the role played by British overseas banks in British business transactions in the twentieth century

2 
 E 
 2. The passage suggests which of the following about the high dividends paid in India by many British managing companies 
during the early 1920s?

(a) They were made possible by the long-term profits gained by British business in India prior to the 1920s. 
(b) They furnish evidence that undermines the accepted view of the results of low dividend-taxation rates on British business in India. 
(c) They were unusually high because the exchange rate was more favorable for the rupee against the sterling than at any other time during the twentieth century. 
(d) They were commensurate with the dividends paid by British managing companies in other Asian countries during the same period. 
(e) They provide a misleading picture of the performance of British business in India from 1919 to 1921.

3 
 C 
 3. The passage is primarily concerned with

(a) refuting a theory about the performance of British business in Asia 
(b) criticizing a widely used method of collecting data about British business in Asia 
(c) considering ways to evaluate the success of British business in Asia 
(d) discussing the advantages and disadvantages of an approach to studying British business in Asia 
(e) presenting an explanation for certain unique features of British business in Asia

NL15 · Accepted Answer

1. The author of the  passage mentions  reserves in British overseas banks  most likely in order to 
 Type of Question:  Author's opinion/ Miscellaneous/ Location-Based

Location in the passage: 
 "Profits Offer one measure, but collecting and comparing the profits and dividends (shares of profits distributed to stockholders) of thousands of enterprises present problems of data and interpretation.  British overseas banks, for example, all maintained large hidden reserves to which transfers were made before published profits were declared.  The actual dividends paid to stockholders were subject to factors such as taxation policy or exchange fluctuations or other factors."

Approach: 
a) Find the exact location.
b) Read one line above the exact location. If required, read one line after the location.
c) Read the question carefully.
d) Predict the answer.
e) Eliminate the options.

(a) point out that published profits are less useful in measuring business success  than are dividends  -  author doesn't compare - Eliminate 
(b) suggest that many  British businesses in Asia  were less successful than their published profits indicated -  Irrelevant 
(c) indicate that data about the profits of various businesses provide more useful information  about short-term than about long-term performance  -  author doesn't mention about short-term/long-term performance - Eliminate 
(d) illustrate the  difficulties in drawing conclusions  about business success or failure from published profits -  In line with what is mentioned one line above the exact location. 
(e) explain the  role played by British overseas banks  in British business transactions in the twentieth century -  Eliminate

Correct Answer (D)
===========================================

2. The passage  suggests  which of the following  about the high dividends paid  in India by many British managing companies during the early 1920s?

Type of Question:  Inference
 Approach: 
a) Find the exact location.
b) Read one line above the exact location. If required, read one line after the location.
c) Read the question carefully.
d) Predict the answer.
e) Eliminate the options.

Location in the passage: 
 "The actual dividends paid to stockholders were subject to factors such as taxation policy or exchange fluctuations or other factors. For example, the high dividends paid in India by many British managing companies in the early 1920s  were more a response to stockholders' demands for short-term profit-taking of earnings the companies had retained from the First World War years —coupled with low rates of dividend taxation in India and a highly favorable currency exchange rate for the Indian rupee against British sterling— than the result of spectacularly successful enterprise during the period 1919 to 1921. "

(a) They were made possible by the  long-term profits gained by British business in India  prior to the 1920s. -  Incorrect as per the above highlighted text from passage (in blue) 
(b) They  furnish evidence  that  undermines the accepted view  of the results of low dividend-taxation rates on British business in India. -  Same as (a) 
(c) They were unusually high because the  exchange rate was more favorable for the rupee  against the sterling than at any other time during the twentieth century. -  Out of Scope 
(d) They were commensurate with the dividends paid by British managing companies  in other Asian countries during the same period . -  out of scope 
(e) They provide a  misleading picture of the performance of British business  in India from 1919 to 1921. -  In line with the highlighted text from the passage.

Correct Answer (E)

=============================================

3. The passage is  primarily concerned with

Type of Question:  Primary Purpose
 Approach: 
a) Get the gist of the passage.
b)Eliminate answer choices based on the words which are not in sync with the summary.
 
(a)  refuting  a theory about the performance of British business in Asia -  author doesn't deny or agree with theory, he simpy gives views 
(b)  criticizing  a widely used method of collecting data about British business in Asia -  author doesn't criticize, he simply gives his views 
(c)  considering  ways to  evaluate the success  of British business in Asia -  author considers the ways - he mentions about what could be challenging in one approach and how the second approach could be better. 
(d) discussing the  advantages and disadvantages  of  an approach  to studying British business in Asia -  passage doesn't talk about only one approach. 
(e) presenting an explanation for certain  unique features of British business  in Asia -  passage doesn't talk about unique feature.

Correct Answer (C)

aceGMAT21 · Answer

Hi Paolo,

Let me try to help. I have picked the portion of the passage which relates to Question 1.

Measuring the performance of British business in Asia  from the late 1800s to the present  is difficult .  Profits Offer one measure , but collecting and comparing the profits and dividends of thousands of enterprises  present problems of data and interpretation.  British overseas banks, for example, all maintained large hidden reserves to which transfers were made  before published profits were declared .

The author says that collecting and comparing profits of the enterprises that comprised the British business in Asia is one method of measuring the performance of British Business in Asia from the specified time period. However, there is a problem of huge chunks of data and its interpretation. Also, the published profits were not the same as the actual profits, therefore, the data interpretation from the published profits would not be the accurate one. So, this example illustrates the fact that profit is not a successful measure to analyse the performance of the British business in Asia. Also, later in the passage one can double confirm this fact, as the author has mentioned MARKET SHARE as a satisfactory measure.

This is clearly expressed by option D - illustrate the difficulties in drawing conclusions about business success or failure from published profits.

This is clearly expressed by option D -  illustrate the difficulties in drawing conclusions about business success or failure from published profits.

Hope this helps. Let me know, if you have any questions.

Thanks.
-Varun

aceGMAT21 · Answer

The options C and D of question 1  are merged into each other . This is leading to confusion. So, I request some moderator to correct the two options as follows :

(c) indicate that data about the profits of various businesses provide more useful information about short-term than about long-term performance 
(d) illustrate the difficulties in drawing conclusions about business success or failure from published profits

carcass

Giampa · Answer

Problems with question 1. Someone could enlighten me?

thangvietnam · Answer

question 3 is hard. it takes me a long time between choice c and b
choice b. 
this is typical wrong answer for main idea question. the wrong answer mention only one or two paragraph but not all paragraphs. choice b mentions only paragraph 1 . it is really about criticization. but last paragraph is about new way of considering British business. so, choice C covers all the paragraph while choice b cover only paragraph 1.

this is hard to realize that the wrong answer choice dose not mention all paragraph.

dcummins · Answer

Passage map - British business performance in Asian countries
P1: To explain difficulties in measuring performance of british businesses in Asian countries
P2: Propose an alternate measure - market cap

Q1 - Purpose  
Reserves are discussed in P1 and from what we know Profits aren't the most accurate measure as banks retained their profits in large hidden reserves, which were transferred and then published.

A is incorrect - true, profits are less useful, but who said dividends were more accurate? We are told dividends are misleading as well later in the passage.
B is incorrect - the passage actually states that british businesses dominated asia
C is incorrect - we know nothing on short/long term performance
D is correct as more broadly, the commentary on profit and dividends serves to exemplify the first sentence of the passage- that "measuring performance is difficult".
E is incorrect - overseas banks in British transactions? We'd want to assess performance in domestic transactions right?

Q2 - Inference 
 High dividends are discussed in P1 - broadly, we know that high dividends were paid in response to demand from stockholders and paid from reserves held from war-time efforts
A - They were made possible by profits, but profits derived from India? I don't think so - they were paid from retained profits accumulating from the WWI
B - what is the accepted view? We don't know this. We just know that dividends taxation rates were favourable.
C - is Incorrect - they were unusually high, but NOT because the exchange rate or taxation rate was lower, it was because stockholders demanded this.
D - No - we cannot support this. We just know that the dividends were unusually high, so I'd stand to argue against this.
E is Correct as we are told Exactly this- "the high dividends... were more a response to stockholders' demands for short-term profit-taking of earnings the companies had retained from the First World War years...than the result of spectacularly successful enterprise during the period 1919 to 1921"

Q3 - Purpose  
Overall the passage is explanatory/ discussion-based concerning the difficulties of measuring business performance, so the tone of the passage is Neutral
A - nothing is refuted. Incorrect
B - nothing is criticized. Incorrect
C - its less about considering, more about discussing ways to evaluate british business performance in asian countries but keep C for now
D - Adv/Disadv of studying business? No.
E - NO - features of the businesses themselves aren't discussed, instead the circumstances in which the businesses operated are discussed.

C is the correct answer- but note this

Considering is defined as "taking into consideration"
Example: Considering the circumstances, Simon was remarkably phlegmatic
Example relevant to us: Considering the circumstances, British business performance is difficult to assess

VerbalBot · Answer

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Measuring the performance of British business in Asia from the late 18

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Measuring the performance of British business in Asia from the late 18

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