Comprehension

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.Ys.) 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.

 

Question: 1

Which of the following statements is NOT true?

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When analyzing profitability trends, it is important to look at both the operating income and the profitability chart for a complete understanding.
Updated On: Aug 1, 2025
  • The company with the third lowest profitability in F.Y. 2001-02 has the lowest operating income in F.Y. 2002-03.
  • The company with the highest operating income in the two financial years combined has the lowest operating profit in F.Y. 2002-03.
  • 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.
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The Correct Option is C

Solution and Explanation

From the data presented in the charts, we can observe that some companies with higher operating incomes in F.Y. 2001-02 actually experienced a decline in profitability in F.Y. 2002-03, which makes statement (3) incorrect. Other statements are consistent with the data.
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Question: 2

Which company recorded the highest operating profit in F.Y. 2002-03?

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To determine the highest operating profit, check the position of the points on the operating profit chart for each company in the relevant year.
Updated On: Aug 1, 2025
  • A
  • C
  • E
  • F
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The Correct Option is A

Solution and Explanation

From the operating profit vs operating income chart, we observe that Company A recorded the highest operating profit in F.Y. 2002-03 as its point lies the highest on the y-axis.
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Question: 3

What is the approximate average operating profit, in F.Y. 2001-02, of the two companies excluded from the third chart?

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To calculate an average, add the operating profits for the selected companies and divide by the number of companies.
Updated On: Aug 1, 2025
  • -7.5 crore
  • 2.5 crore
  • 3.25 crore
  • Cannot be determined
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The Correct Option is B

Solution and Explanation

By analyzing the operating profit for each company, the average operating profit for the two companies excluded from the third chart can be estimated as approximately 2.5 crore.
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Question: 4

The average operating profit in F.Y. 2002-03 of companies with profitability exceeding 10% in F.Y. 2002-03, is approximately:

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To find the average operating profit, sum the operating profits of the qualifying companies and divide by the number of companies that meet the criteria.
Updated On: Aug 1, 2025
  • 17.5 crore
  • 25 crore
  • 27.5 crore
  • 32.5 crore
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The Correct Option is C

Solution and Explanation

By referring to the profitability chart, the average operating profit for companies with profitability exceeding 10% in F.Y. 2002-03 is approximately 27.5 crore.
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