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CAT 2002 — DILR Question 21

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Passage / Data

Answer the following question based on the information given below.

Following table shows the REPSOL YPF's Operations of oil and gas producing activities.

​​​​​​​​​​​​​​

If profitability is defined as the ratio of net income after taxes and charges to expenses, then which of the following statements is true?

Answer & solution

  • A

    The Far East operations witnessed its highest profitability in 1998.

  • The Northern Sea operations increased its profitability from 1998 to 1999.

  • C

    The operations in Argentina witnessed a decrease in profitability from 1998 to 1999.

  • D

    Both 2 and 3 are true.

Solution

Consider option 1:

Profitability of Far East operations in 1998 = 1063 = 0.158

Profitability of Far East operations in 1999 = 58204 = 0.284

Profitability of Far East operations in 2000 = 189311 = 0.607

The profitability is highest for the year 2000.

∴ Option 1 is false.

Consider option 2:

Profitability of Northern Sea operations in 1998 = 2452 = 0.462

Profitability of Northern Sea operations in 1998 = 5465 = 0.831

Profitability is increased from 1998 to 1999.

∴ Option 2 is true.

Consider option 3

Profitability of Argentina operations in 1998 = 61187 = 0.326

Profitability of Northern Sea operations in 1998 = 5001168 = 0.428

Profitability has increased from 1998 to 1999.

∴ Option 3 is false.

Hence, option (b).

CAT 2002 DILR Q21: If profitability is defined as the ratio of net income after taxes and charges to expenses, then which of the — Solution | TheCATExam