Graphs

Questions involving graphs rarely involve any significant calculating. Usually, the solution is merely a matter of interpreting the graph.

Questions 1-5 refer to the following graphs.

SALES AND EARNINGS OF CONSOLIDATED CONGLOMERATE

Sales

(in millions of dollars)

1. During which year was the companyÂ’â€™s earnings 10 percent of its sales?

(A) 85
(B) 86
(C) 87
(D) 88
(E) 90

Reading from the graph, we see that in 1985 the companyÂ’â€™s earnings were $8 million and its sales were$80 million. This gives

8 80 = 1 10 = 10 100 = 10%

2. During what two-year period did the companyÂ’â€™s earnings increase the greatest?

(A) 85Â–â€“87
(B) 86Â–â€“87
(C) 86Â–â€“88
(D) 87Â–â€“89
(E) 88Â–â€“90

Reading from the graph, we see that the companyÂ’â€™s earnings increased from $5 million in 1986 to$10 million in 1987, and then to $12 million in 1988. The two-year increase from Â‘â€˜86 to Â‘â€˜88 was$7 millionâ€” clearly the largest on the graph. The answer is (C).

3. During the years 1986 through 1988, what were the average earnings per year?

(A) 6 million
(B) 7.5 million
(C) 9 million
(D) 10 million
(E) 27 million

The graph yields the following information:

Forming the average yields 5 + 10 + 12 3 = 27 3 = 9 . The answer is (C).

4. In which year did sales increase by the greatest percentage over the previous year?

(A) 86
(B) 87
(C) 88
(D) 89
(E) 90

To find the percentage increase (or decrease), divide the numerical change by the original amount. This yields

The largest number in the right-hand column, 60%, corresponds to the year 1988. The answer is (C).

5. If Consolidated ConglomerateÂ’â€™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?

(A) None
(B) One
(C) Two
(D) Three
(E) Four

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).