CAT 2003 Slot 2 — DILR Question 34
Answer the following question based on the information given below.
The profitability of a company is defined as the ratio of its operating profit to its operating income, typically expressed in percentage. The following two charts show the operating income as well as the profitability of six companies in the Financial Years (F.Y.s) 2001-02 and 2002-03.
The operating profits of four of these companies are plotted against their respective operating income figures for the F.Y. 2002-03, in the third chart given below.
Which of the following statements is NOT true?
Answer & solution
- A
The company with the third lowest profitability in F.Y. 2001-02 has the lowest operating income in F.Y. 2002-03.
- B
The company with the highest operating income in the two financial years combined has the lowest operating profit in F.Y. 2002-03.
- C
Companies with a higher operating income in F.Y. 2001-02 than in F.Y. 2002-03 have higher profitability in F.Y. 2002-03 than in F.Y. 2001-02.
Companies with profitability between 10% and 20% in F.Y. 2001-02 also have operating incomes between 150 crore and 200 crore in F.Y. 2002-03.
Let us analyse each of the given statement.
Consider option 1:
The company with the third-lowest profitability in 2001-02 is A and the company showing the lowest operating income in 2002-03 is also A.
∴ Option 1 is true.
Consider option 2:
From graph 1 we can conclude that the combined operating income both the years is highest for D.
Approximate operating profit for D(2002 - 03) = = 2.75
From the 3rd graph, the operating profits for companies are above 15. These four companies are A, C, E and F.
∴ We have to compare operating profits for D and B.
∴ (Operating Profit)B = ((Operating Profit)D
∴ D shows the lowest operating profit.
∴ Option 2 is also true
Consider option 3:
Company with higher operating income in 2001-02 than in 2002-03 is just one which is B.
B shows higher profitability in 2002-03 than in 2001-02.
∴ Option 3 is also true.
Consider option 4:
Companies with profitability between 10% and 20% in 2001-02 are A, C and E.
Operating income of C is more than 200 crores in 2002-03.
∴ Option 4 is not true.
Hence, option (d).