For 2007, Accenzant IT systems posted annual gross revenues that were

Question

For 2007, Accenzant IT systems posted annual gross revenues that were 220 percent greater than those of five years ago. Despite this rise in revenue, the stock price of Accenzant is only 35 percent of its stock price five years ago.

Which of the following, if true, best accounts for the decline of the company's stock in spite of the increased revenues?

A The company's total operating costs have risen 185 percent over the last five years.

B The company devotes a greater percentage of its revenues to research and development now than it did five years ago.

C The company's top-selling item of five years ago, a database tool, has been surpassed in sales in recent years by the company's revised suite of human resources software

D The software sector in general was highly favored by investors five years ago, and consequently many software companies received a higher stock valuation per dollar of revenue at that time than they do today.

E Five years ago Accenzant was engaged in an aggressive price war with a competitor that is no longer in the business.

itisSheldon · Answer

Option A cannot be the answer. Since stock price and selling price are not same increased Cost price has no effect on the decline in the stock price of the company. 
Option B,C and E doesn't make sense. 
While  Option D  says that the software company received higher stock valuation per dollar of revenue at that time than they do today, explains the current decline in the stock price.

warrior1991 · Answer

In paradox type of questions, always look for an answer that addresses both the situations made in the argument.
Option D does that and hence is a correct answer.

Manimoneyy · Answer

Typical example to be solved with this pattern

1. Understand logic and conclusion 
2. A. if question is open ended - strengthen the above passage or B. the question is saying strengthen a specific part of passage by providing conclusion in the question stem ?
3.If B type - then Pre-think would only require thinking option which can strengthen Logic. If A type - we need 2 prethink options one for logic and one for conclusion 
4. Rule out option by glance and here you go.

Here - we know the passage is asking us to strengthen specific conclusion - logic strengthening B type - so something happened that reduced the stock price.

D option answer

VerbalBot · Answer

Automated notice from GMAT Club VerbalBot: 

A member just gave Kudos to this thread, showing it’s still useful. I’ve bumped it to the top so more people can benefit. Feel free to add your own questions or solutions.

 This post was generated automatically.

For 2007, Accenzant IT systems posted annual gross revenues that were

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

For 2007, Accenzant IT systems posted annual gross revenues that were

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards