In an effort to reduce costs and increase profits, a parent company

Question

In an effort to reduce costs and increase profits, a parent company reviewed the account books of thirty of its franchises and found six franchises that had the same ration of profits to revenues in 1990 as they had in 1970. The parent company then concluded that these six franchises should serve as examples for those franchises that want to keep their ration of profits to revenues stable over the years.

Which of the following, if true, most seriously weakens the author's conclusion that these six franchises are best suited to the role described above?

A) Most franchises want to increase their ratio of profits to revenues. 
 B) Most franchises are more concerned with profits alone than with the ratio of profits to revenues. 
 C) Each of the six franchises deals with its customers in different ways. 
 D) Of the six franchises, three had a much smaller, and three had a much larger, ratio of profits to revenues in 1980 than in 1990. 
 E) The profits of the six franchises range from 25 percent to 40 percent of their revenues.

bot00078 · Answer

IMO
  D focuses on the outcome (the ratio stability) itself , proving the outcome was an illusion, while  C focuses on the process (customer dealings) , which is irrelevant to the stated conclusion about stability.

ankitksingh · Answer

Can you please help with the OE?

Sajjad1994 · Answer

Hi ankitsingh

This is not the official explanation but could help you.

According to the passage the parent company looked at 30 franchises’ books. Found 6 franchises whose ratio of profits to revenues was the same in 1990 as in 1970.

Conclusion:  These 6 franchises should be examples for franchises that want to keep that ratio stable over the years.

Possible flaw:  The argument assumes these 6 franchises were good at keeping the ratio stable over that 20-year period. But what if, between 1970 and 1990, the ratio fluctuated wildly, and just by coincidence in 1990 it matched 1970? Then they’re not good examples of stability, just of ending up at the same ratio.

Option (D)  says: Of the six, three had a much smaller and three a much larger ratio in 1980 than in 1990. That means in 1980 the ratio was very different, so between 1970 and 1990 there was significant fluctuation, not stability. They are not models of maintaining a stable ratio, just models of having the same ratio in two specific years 20 years apart. This directly weakens the conclusion that they should serve as examples for  “keeping the ratio stable over the years.”

(A):  irrelevant as desire to increase vs. keep stable doesn’t weaken.

(B):  irrelevant, concern about profits vs. ratio doesn’t weaken the claim about these 6 being good examples for stability.

(C):  irrelevant, how they treat customers doesn’t affect the financial ratio stability point.

(E):  irrelevant, the range of ratio in 1990 doesn’t show instability over time.

Answer: D

Markhu106 · Answer

OFFICIAL EXPLANATION BY PRINCETON REVIEW
 
Conclusion:  These six franchises should serve as examples for those franchises that want to keep their ratio of profits to revenues stable over the years. 
  Premise:  Six franchises...had the same ratio of profits to revenues in 1990 as they had in 1970. 
  Assumption:  The 1990 and 1970 ratios of profits to revenues are indicative of stable ratios for all intervening years. 
 The question stem asks to  weaken the author's conclusion , so this is a weaken question. Based on a review of its franchise account books, the parent company found six franchises  that had the same ratio of profits to revenues in 1990 as they had in 1970 . Based on the ratios from these two years, the company concluded that  these six franchises should serve as examples for those franchises that want to keep their ratio of profits to revenues stable over the years . The author mentions two years in the premise,  1990  and  1970 , but then draws a conclusion about stability  over the years . Such a shift indicates an assumption about what the two years in the premise signify. Specifically, that the ratios of profits in 1990 and 1970 indicate a trend of stability for the intervening years. As this is a weaken question, the correct answer will attack this assumption. Evaluate the answer choices. 
 Choice A: No. Wanting to  increase their ratio of profits to revenues  is out of scope. The passage is concerned with examples of ratio stability and assumption of a trend, not the desires of franchises. 
 Choice B: No. Franchises  concerned with profits alone  is out of scope. The passage is concerned with examples of ratio stability and assumption of a trend, not the concerns of franchises. 
 Choice C: No. How a franchise  deals with its customers  is out of scope. The passage is concerned with examples of ratio stability and assumption of a trend, not customer service. 
  Choice D: Correct. Of the six example franchises, if three of them had a much smaller and three of them had a much larger ratio of profits to revenues in 1980, then the assumption of ratio stability from 1970 to 1990 is contradicted.  
 Choice E: No.  Range  of  profits  as a  percent of their revenues  for the six franchises is out of scope. The author made no statement that the six franchises had the same ratios as each other, only that each franchise had the same ratio in 1990 that it had in 1970. 
 The correct answer is choice D.

In an effort to reduce costs and increase profits, a parent company

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In an effort to reduce costs and increase profits, a parent company

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