Company X's profits this year increased by 25% over last year's profit

Question

Company X's profits this year increased by 25% over last year's profits. Was the dollar amount of Company X's profits this year greater than the dollar amount of Company Y's?

(1) Last year, the ratio of Company Y's profits to Company X's profits was 5:2.
(2) Company Y experienced a 40% drop in profits from last year to this year.

ID: 700107
(DS14170)

GMATBusters · Accepted Answer

dave13 , please see this approach
Let the profit of X last year = x
Let the profit of Y last year = y

This year , X profit =  X' = 1.25x
Y this year profit =  Y'  ?

To find whether  X' > Y'  ?
Statement 1 :  \frac{y}{x} =  \frac{5}{2} 
So y = 2.5x

But  Y'  is not known,  NOT SUFFICIENT.

Statement 2:  Y'  = 0.6y 
But we don't know the relation between x and y ,  NOT SUFFICIENT.

Combining Statement 1 & 2, We get
Y this year profit =  Y'  = 0.6y = 0.6*2.5x = 1.5x
Also from Question stem, X profit =  X' = 1.25x

So,  X' < Y'

SUFFICIENT 
 
answer C

PKN · Answer

Let company X's profit last year be p and company Y's profit be 'q' last year.
Company X's profits this year increased by 25% over last year's profits.
So X's profit this year=1.25p.---------------(1)

Question stem:-  profit_{X}>profit_{Y} ?  (This year)

St1:- Last year, the ratio of Company Y's profits to Company X's profits was 5:2.
Or, \frac{p}{q}=\frac{5}{2}  -----------------(2)
No data available on profit of company Y this year. So, we can't determine any relationship between profit of X and Y this year.
Insufficient.

St2:-Company Y experienced a 40% drop in profits from last year to this year.
So Y's profit this year=0.6q-------------(3)

from (1) and (3),This year,  \frac{profit_{X}}{profit_{Y}}=\frac{1.25p}{0.6q}=\frac{1.25}{0.6}*(\frac{p}{q}) --(4)
Since p and q are unknown. We can't determine the above relationship.
Hence, insufficient.

combining, from (2), we have the ratio of p/q . Hence we can substitute it in (4). Therefore, we can say which company has more profit this year.

Sufficient.

(C)

harish1986 · Answer

Why shouldn't it be A? Since the profit of Y/X is given as 5:2 and X profits increased by 25 %, doesn't it give a clue?

Let us say X's profit is 200 and Y's profit is 500; the x profit will never go above 500.

Izzyjolly · Answer

We need to compare X's Profit  this  year and Y's Profit  this  year.

Statement 1 give us info about the ratio of Y's Profit  last  year and X's Profit  last  year. As a result, we can compare X's Profit  this  year and Y's Profit  last  year. However, we do not know anything about Y's Profit  this  year, we cannot compare X's Profit  this  year and Y's Profit  this  year. --> Statement 1 alone is not sufficient.

Statement 2 give us the relationship between Y's Profit last year and Y's Profit this year. Nothing related to X's profit is mentioned --> clearly not sufficient.

(1) + (2) we have all relationships needed --> Sufficient.
X's profit this year = (5/4)* X's profit last year = (5/4) * (2/5) * Y's profit last year = (5/4) * (2/5) * (5/3) * Y's profit this year

Answer : C.

Hope it's clear.

dave13 · Answer

niks18 here is my reasoning of problem x = 1.25 y = 0.60 ratio y to x = 5 : 2 last year ratio y to x = \frac{5-y}{2+x} this year combining two statements together \frac{1.25}{0.60} = \frac{2+x}{5-y} cross multiply (2+x)0.60 = 1.25(5-y) is it correct equation ? if not where did I go wrong

pls explain thanks! P.S. changed my solution 10 times

niks18 · Answer

Hi  dave13

I am not exactly sure, what you did there and how you got the highlighted part

dave13 · Answer

niks18 i am not sure what i did there either

but let me explain it thanks for pointing out my mistake

ok let write detailed solution which i dont think is correct but still x profits this year = 1.25 y profits this year = 0.60 let X be the number of profits of company X let Y be the number of profits of company Y If last year ratio of profits Y to X was 5 : 2 or \frac{5}{2} Then this Year ratio must be \frac{5 -y}{2+x} Based on the above data i create an equation \frac{1.25}{0.60} = \frac{2+x}{5 -y} cross multiply and now again i got stuck

whats wrong with my solution

how to get the value ?

Hi pushpitkc , I think niks18 is on holiday

maybe you can explain ?

hi gmatbusters can you please bust this qustion for me ?

i need correct detailed sulotion based on my wrong solution above

GMATBusters · Answer

Hi @dave13, I tried to explain the error, Please let me know if it is not clear. here is my reasoning of problem x = 1.25 y = 0.60 ratio y to x = 5 : 2 last year ratio y to x = \frac{5-y}{2+x} this year combining two statements together \frac{1.25}{0.60} = \frac{2+x}{5-y} cross multiply (2+x)0.60 = 1.25(5-y) is it correct equation ? if not where did I go wrong

pls explain thanks! P.S. changed my solution 10 times

Hi dave13 I am not exactly sure, what you did there and how you got the highlighted part niks18 i am not sure what i did there either

but let me explain it thanks for pointing out my mistake

ok let write detailed solution which i dont think is correct but still x profits this year = 1.25 , y profits this year = 0.60 It is wrong, we cannot take x and y as you did, because it will be only possible if both x and y have equal profit =1. let X be the number of profits of company X- last year let Y be the number of profits of company Y- last year If last year ratio of profits Y to X (last year) was 5 : 2 or \frac{5}{2} Then this Year ratio must be \frac{5 -y}{2+x} - NOT VALID Based on the above data i create an equation \frac{1.25}{0.60} = \frac{2+x}{5 -y} ] cross multiply and now again i got stuck

whats wrong with my solution

how to get the value ?

Hi pushpitkc , I think niks18 is on holiday

maybe you can explain ?

hi gmatbusters can you please bust this qustion for me ?

i need correct detailed sulotion based on my wrong solution above

dave13 · Answer

hi gmatbusters many thanks for response and explanation: just one question how did you get this So y = 2.5x ? I understand that \frac{y}{x} = \frac{5}{2} but somehow cant undestand how you got y = 2.5x

thank you!

GMATBusters · Answer

Your Query : I understand that \frac{y}{x} = \frac{5}{2} but somehow cant undestand how you got y = 2.5x

Response : y/x = 5/2= 2.5, now multiply both sides by x , we get y = 2.5x.

hope it is clear now.

GMATBusters · Answer

Replying to a PM, 
Yes we can solve this question by taking numbers.

Aim: To find Whether X this year profit is greater than Y ?
Let X last year profit = 100
X this year profit = 125

Aim reduces to: finding Y profit this year

St1) Y last year profit = 5/2 times X last year profit = 250
But we have no idea of Y this year profit.
So  insufficient  to answer.

St2) Y profit dropped by 40% this year
But we don't know Y profit last year, so  insufficient  to find Y profit this year.

Combinin St1 & 2, We et
Y last year profit = 0.6*Y last year profit = 0.6*250= 150

hence , We can answer that X this year profit is not greater than Y this year profit.

SUFFICIENT,

Answer C

Salsanousi · Answer

x1 be for last year
x2 be for this year

x2 = x1 * 1.25

we want to know y2 > x2?

Statement 1) tells us that y1 to x1 is 5a to 2a

this is insufficient because I don't know how will the y2 change.

Statement 2) tells us that y2 = 0.6 * y1

But I don't have any basis of comparison between x2 and y2

Statement (1) and (2) combined tells us that y2 = 5a * 6/10 = 3a and x2 = 2a * 1.25 = 5/4 * 2 = 5/2 = 2.5a

3a > 2.5a

sufficient. Answer choice C

Jsound996 · Answer

From the question stem:
Company X Profit (This Year) = 1.25(Company X Profit Last Year)

Is Company X Profit (This Year) > Company Y Profit (This Year)?

Statement 1:
 \frac{Company Y Profit}{Company X Profit} = \frac{5}{2}

We know that Company X profit this year increased by 25%, so:

\frac{Company Y Profit}{Company X Profit} = \frac{5}{(2*1.25)} 
But we don't know if Company's Y profit increased or decreased from last year or this year. 
Statement 1 is insufficient (Cross out A and D)

Statement 2:

Company Y Profit (This Year) = 0.60(Company Y Profit Last Year), but we don't know anything about the starting values of Y
Statement 2 Insufficient (Cross out C)

Both:

When we combine both statements:

\frac{This Year Company Y Profit}{This Year Company X Profit} = \frac{(5*0.6)}{(2*1.25)}

Enough data to determine which is larger.

C is the answer!

kokus · Answer

How can we find a dollar amount (actual value) if no actual numbers/values are given in the Q?

Basshead · Answer

The question is  not  asking for a specific dollar amount. The question simply requires a yes/no answer: Was the dollar amount of Company's profits this year greater than the dollar amount of Company Y's?

Given: Company's X profits increased by 25% over last year's profits

let Company X profits last year = 100
Company X profits this year = 125

(1) Last year, Company Y's profits to Company X's profits was 5:2.

This tell us Company Y's profits last year was $250. No info about Y's profits this year. INSUFFICIENT.

(2) Company Y experienced a 40% drop from last year to this year

We don't know what Y's profits were last year. Could be $10 million, in which the profits this year would still be greater. INSUFFICIENT.

(1&2) If Y's profits last year was $250 and this dropped 40%, then Y's profits this year were $150.

150 > 125

We can conclude that X's profits this year are less than Y's profits. If you plug in any numbers, you'll see that this is the case.

Answer is C.

wishmasterdj · Answer

Wonderful Twist - The word 'dollar' amount is put in there to make people choose E, but essentially you don't quite have to calculate that amount. As long as you are able to translate the 2 metrics in a common currency, we are good.

1-> tells us the ratio between X and Y last year, but nothing as to what it was for Y in this year
2-> tells us the jump from last year to this year, but the connection between X and Y is missing, so we cant compare their profits.

1+2 -> gives you all you need to take out Y's profits in terms of X (or the other way round) and hence the 'dollar' amount comparison can be made.

woohoo921 · Answer

KarishmaB If you have time, I would be so appreciative for your insights on combining the statements. I am getting confused with the notation. I understand how you would manipulate PX=(2/5)*PY but then the Official Answer goes onto do P'x=1.25*(2/5)*PY. How can you swap in the P'x when no relationship to the second statement is given relative to the first statement? Thank you for all of your time

My GMAT is coming up soon, so at the final stretch!

jpear · Answer

For

1) 5/2 = Y/X or 10/4 for easier manipulation

10/4 -> 10/5 which still has company y having more profits - but we don't know if theirs changed so NS

2) if x increased 25% and Y dropped 40% still NS because x could be 10 -> 12.5 and Y could be 100 -> 60

so its either C or E

C)

5/2 = Y/X = 10 / 4 = = (10*.6) / (4 * 1.25) = 6 / 5 -> S Y is still greater than X

C is correct

Company X's profits this year increased by 25% over last year's profit

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Company X's profits this year increased by 25% over last year's profit

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