Graphs
Questions involving graphs rarely involve any significant calculating. Usually, the solution is merely a matter of interpreting the graph.
Questions 14 refer to the following graphs.
Sales and Earnings of Consolidated Conglomerate
Sales (in millions of dollars) 
Earnings (in millions of dollars) 
Note: Figures drawn to scale. 
Question1
During which year was the companyâ€™s earnings 10 percent of its sales?
 85
 86
 87
 88
 90
Solution
Reading from the graph, we see that in 1985 the companyâ€™s earnings were $8 million and its sales were $80 million. This gives
The answer is (A).
Question2
During the years 1986 through 1988, what were the average earnings per year?
 6 million
 7.5 million
 9 million
 10 million
 27 million
Solution
The graph yields the following information:
Year  Earnings 
1986  $5 million 
1987  $10 million 
1988  $12 million 
Forming the average yields .
The answer is (C).
Question3
In which year did sales increase by the greatest percentage over the previous year?

86

87

88

89

90
Solution
To find the percentage increase (or decrease), divide the numerical change by the original amount. This yields
Year  Percentage increase 
86  
87  
88  
89  
90 
The largest number in the righthand column, 60%, corresponds to the year 1988.
The answer is (C).
Question4
If Consolidated Conglomerateâ€™s earnings are less than or equal to 10 percent of sales during a year, then the stockholders must take a dividend cut at the end of the year. In how many years did the stockholders of Consolidated Conglomerate suffer a dividend cut?
 None
 One
 Two
 Three
 Four
Solution
Calculating 10 percent of the sales for each year yields
Comparing the right columns shows that earnings were 10 percent or less of sales in 1985, 1986, and 1990.
The answer is (D).
Year  10% of Sales (millions)  Earnings (millions) 
85  .10 Ã— 80 = 8  8 
86  .10 Ã— 70 = 7  5 
87  .10 Ã— 50 = 5  10 
88  .10 Ã— 80 = 8  12 
89  .10 Ã— 90 = 9  11 
90  .10 Ã— 100 = 10  8 