# Graphs

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

Questions 1-4 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.

Question-1

During which year was the companyâ€™s earnings 10 percent of its sales?

1. 85
2. 86
3. 87
4. 88
5. 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

Question-2

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

1. 6 million
2. 7.5 million
3. 9 million
4. 10 million
5. 27 million
Solution

The graph yields the following information:

 Year Earnings 1986 $5 million 1987$10 million 1988 \$12 million

Forming the average yields .

Question-3

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

1. 86
2. 87
3. 88
4. 89
5. 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 right-hand column, 60%, corresponds to the year 1988.

Question-4
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?
1. None
2. One
3. Two
4. Three
5. Four
Solution
Calculating 10 percent of the sales for each year yields

 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

Comparing the right columns shows that earnings were 10 percent or less of sales in 1985, 1986, and 1990.