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Questions 1
Section I

Group Question

Answer the following questions based on the information given below.

Foreign Direct Investment (FDI) is an important source of non-debt inflows. It provides opportunities to host countries to enhance their economic
development. The following chart represents the FDI inflows for India and Developing Economies during the years 1996 to 2005 in US dollars.

[FMS 2009]

1. What was the average annual percentage growth rate in the FDI inflows for India during the year 2002 to 2005?
1 Marks

1) 12%

2) 14%

3) 17%

4) 21%

Solution:
The FDI inflow for India from 2002 to 2005 is as follows:

Hence, option 2.

2. What was the percentage rate of decline in the FDI inflows for developing economies during the years 2001 to 2003?
1 Marks

1) 14%

2) 12%

3) 11%

4) 9%

Solution:
The FDI inflow for developing economies for 2001 and 2003 was approximately $175 billion and $150 billion respectively.

Hence, option 1.
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Hence, option 1.

3. In which of the following pairs of years was the percentage change between the FDI inflows for developing economies approximately
1 Marks equal to the percentage change in FDI inflows for India?

1) 1997 to 1999

2) 2000 to 2002

3) 2001 to 2003

4) 2003 to 2005

Solution:
The best way to solve this question is to take each answer option and find the respective percentages as can be seen in the table
below:

As can be seen, the two values closest to each other are for the period 2001-2003.

Hence, option 3.

4. What is the ratio of the average FDI inflow for India to average FDI inflow for Developing economies during 2002-2005?
1 Marks

1) 0.09

2) 0.06

3) 0.03

4) None of these

Solution:
The FDI inflow for India for the years 2002 to 2005 is 5, 4, 5 and 6.8 billion USD respectively.

The FDI inflow for the Developing Economies for the years 2002 to 2005 is 153, 150, 200 and 225 billion USD respectively.

Hence, option 3.

Group Question

Answer the following questions based on the information given below.

The Financial Performance of NHPC Ltd. for the period 2005-2010 is presented in the following charts (All figures are in Rs. Crores).

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Evaluate the pairs of statements in each question on the basis of data given in charts and mark:

(1) if only Statement I is correct.

(2) if only Statement II is correct.

(3) if both- the Statements are correct.

(4) if none of the Statements is correct.

[FMS 2011]

5. Statement I: The Networth to Borrowings ratio has been the lowest in the year 2008-09.
1 Marks
Statement II: The Profit to Networth ratio has been the highest in the year2008-09.

1) 1

2) 2

3) 3

4) 4

Solution:
Statement I:

Consider the Net worth to borrowing ratio for each year.

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Consider the Net worth to borrowing ratio for each year.

In 2005–06 and 2006-07 it is greater than 2.

In 2007–08 and 2009-10 it is greater than 1.5.

Only in 2008-09 it is less than 1.5

∴ Statement I is correct.

Statement II:

Consider the Net worth to profit ratio for each year. The year with the lowest value of this ratio will be the year with the highest ratio of
profit to Net worth. In each of the years from 2005-06 to 2008-09, the ratio of Net worth to profit is greater than 15. In 2009-10 alone it
falls below 15.

∴ The profit to net worth ratio has been the highest in the year 2009-10

∴ Statement II is incorrect.

Hence, option 1.

6. Statement I: Percentage Profit growth over the previous year has been the lowest in the year 2008-09.
1 Marks

Statement II: The Profit to Net Sales ratio has been the highest in the year 2006-07.

1) 1

2) 2

3) 3

4) 4

Solution:
Statement I:

We can observe that the percentage growth in profit will be lowest in either 2007-08 or in 2008-09.

In 2007-08, the growth is 80/924 and in 2008-09 it is 71/1004

In the latter, the numerator is smaller than the former and the denominator is bigger. So the latter is smaller than the former.

∴ The percentage growth in profit over the previous year is the lowest in the year 2008-09.

∴ Statement I is correct.

Statement II:

Consider the net sales to profit ratios for all years. In all the years except in 2006-07 it is greater than 2. Hence this ratio is the least
in 2006-07. So the ratio of profit to net sales is highest in 2006-07.

∴ Statement II is correct.

Hence, option 3.

7. Statement I: Percentage Value Added growth over the previous year has been the highest in the year 2009-10.
1 Marks

Statement II: The Profit to Networth ratio has been the lowest in the year 2007-08.

1) 1

2) 2

3) 3

4) 4

Solution:
Statement I:

The value added in 2009-10 is more than 1.5 times that in 2008-09. In no other year is this ratio so high. So clearly, the percentage
value added growth over the previous year has been the highest in the year 2009-10.

∴ Statement I is correct.

Statement II:

In the year 2005-06 the ratio of Net worth to profit is greater than 20. In no other year is it so high. So the ratio of profit to Net worth
has been the lowest in the year 2005 – 06.
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has been the lowest in the year 2005 – 06.

∴ Statement II is incorrect.

Hence, option 1.

8. Statement I: Percentage Value Added growth over the previous year has been the highest in the year 2007-08.
1 Marks

Statement II: Percentage Value Added growth over the previous year has been the lowest in the year 2006-07.

1) 1

2) 2

3) 3

4) 4

Solution:
Statement I:

From the solution to the third question of this set, we can see that percentage value added growth over the previous year has been
the highest in the year 2009 – 10.

∴ Statement I is incorrect.

Statement II:

The value added is greater than 1.1 times the previous year in all years except in 2006-07. Hence, the percentage value added growth
over the previous year has been the lowest in the year 2006-07.

∴ Statement II is correct.

Hence option 2.

9. Statement I: Profit to Net Sales ratio has been consistently improving over the period under review.
1 Marks

Statement II: Profit to Networth ratio has not been consistently improving over the period under review.

1) 1

2) 2

3) 3

4) 4

Solution:
Statement I:

From the solution to question 176, we can see that there is an inconsistency in the trend of the ratio of Net Sales to Profit in the year
2006-07.

∴ Statement I is incorrect.

Statement II:

We can see that the ratio of Networth to profit is the highest in 2005-06 (>20) and lowest in 2009-10 (< 15)We only need to see if this
ratio decreases over the years 2006-07, 2007-08 and 2008-09.

The values of the ratio of Networth to Profit in 2006-07, 2007-08 and 2008-09 are approximately 18, 17.2 and 16.72 respectively.

Thus the ratio of profit to Networth has been consistently improving over the period under review.

∴ Statement II is incorrect.

Hence, option 4.

10. Statement I: Net Sales to Networth ratio has been less than 15% in all, but one, years.
1 Marks

Statement II: Profit to Networth ratio has been more than 5% in all, but one, years.

1) 1

2) 2

3) 3

4) 4
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4) 4

Solution:
Statement I:

Consider 2005-06

Estimating similarly we can see that the ratio less than 15 in 2006-07 and 2007-08, and is very close to 15 in 2008-09 and 2009-10.

In 2008-09,

17978 × 15 = 269670 > 267100

∴ The ratio is less than 15.

In 2009-10,

23273 × 15 = 349095 < 421800

∴ The ratio is greater than 15.

∴ Statement I is correct.

Statement II:

From the solution to the third question of this set, the ratio of Networth to profit is greater than 20 only for 1 year.

∴ Statement II is correct.

Hence, option 3.

11. Statement I: Profit to Net Sales ratio suffered in the year 2007-08 as compared to the previous year.
1 Marks

Statement II: Profit to Net Sales ratio was the highest in the year 2009-10.

1) 1

2) 2

3) 3

4) 4

Solution:
From the solution to the second question, we can see that statement I is correct.

Also, we can see that profit to Net sales ratio was the highest in the year 2006 – 07.

∴ Statement II is incorrect.

Hence, option 1.

12. Statement I: Percentage Value Added growth over the previous year has been the highest in the year 2009-10.
1 Marks

Statement II: Percentage Value Added growth over the previous year has been the lowest in the year 2006-07.

1) 1

2) 2

3) 3

4) 4

Solution:
From the solution to the third question, we can see that both statements I and II are correct.

Hence, option 3.

Group Question

Answer the questions based on the following graph.

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[IIFT 2008]

13. In which year the annual growth rate of total production (of all products) is highest?
1 Marks

1) 1991

2) 1992

3) 1993

4) 1995

Solution:
Observing the given chart carefully it becomes evident that the growth rate was highest in 1992.

Hence, option 2.

14. If the stability of the production during 1990 to 1995 is defined as,
1 Marks

then which product is most stable?

1) Product P

2) Product Q

3) Product R

4) Product S

Solution:

The stability was maximum for product S as can be seen from the above table.

Hence, option 4.

15. If four products P, Q, R and S shown in the graph are sold at price of Rs. 9, Rs. 4, Rs.13 and Rs.3 respectively during 1990-
1 Marks
1995, then the total revenue of all the products is lowest in which year?

1) 1991

2) 1992

3) 1993

4) None of the above

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Solution:

The total revenue was minimum in 1993.

Hence, option 3.

16. Individual revenue of P, Q, R and S for the entire period (1990-1995) is calculated based on the price of Rs.9, Rs.4, Rs.13 and Rs.3
1 Marks respectively. Which product fetches the lowest revenue?

1) Product P

2) Product Q

3) Product R

4) Product S

Solution:

The table above shows the total revenue from each product using the table from the solution of the previous question.

Product Q fetched the least revenue.

Hence, option 2.

17. Four products P, Q, R and S shown in the graph are sold at price of Rs.9, Rs.4, Rs.13 and Rs.3 respectively during 1990-1995.
1 Marks Which of the following statements is TRUE?

1) Product R fetches second highest revenue across products in 1991.

2) Sum of revenue of P, Q and S is more than the revenue of R in 1994.

3) Cumulative revenue of P and Q is more than the revenue of S in 1993.

4) None of the above

Solution:
Using the table from the above answer:

Consider statement 1:

In 1991, product R fetched the highest revenue,

∴ Statement 1 is false.

Consider statement 2:

Sum of revenue of P, Q and S in 1994 = 675 + 160 + 264 = Rs. 1099 whereas the revenue of R in 1994 is Rs. 1716

∴ Statement 2 is false.

Consider statement 3:

Revenue of P and Q together in 1993 = 342 + 240 = Rs. 582, whereas the revenue of S in 1993 is Rs. 417

∴ Statement 3 is true.

Hence, option 3.

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Group Question

Answer the questions based on the following two graphs, assuming that there is no fixed cost component and all the units produced are sold in the
same year.

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[IIFT 2008]

18. In which year per unit cost is HIGHEST?

1 Marks

1) 2002

2) 2001

3) 2005

4) 2007

Solution:

The table above shows the complete analysis of cost.

We see that the cost per unit is highest in the year 2001.

Hence, option 2.

19. What is the approximate average quantity sold during the period 2000-2010?
1 Marks

1) 64 units

2) 70 units

3) 77 units

4) 81 units

Solution:
From the table given in the solution of the above question, the total units sold in the period 2000–2010 = 765

∴ Average is 69.55 or 70 units.

Hence, option 2.

20. If volatility of a variable during 2000-2010 is defined as

1 Marks

then which of the following is TRUE?

1) Price per unit has highest volatility

2) Cost per unit has highest volatility

3) Total profit has highest volatility

4) Revenue has highest volatility

Solution:

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The table above shows the volatility of each parameter.

We see that volatility is maximum for Total Profit.

Hence, option 3.

21. If the price per unit decreases by 20% during 2000-2004 and cost per unit increases by 20% during 2005-2010, then during how
1 Marks many number of years there is loss?

1) 3 years

2) 4 years

3) 5 years

4) 7 years

Solution:

The table above shows the new price per unit and cost per unit.

∴ We see that there is loss for 5 years.

Hence, option 3.

22. If the price per unit decreases by 20% during 2000-2004 and cost per unit increases by 20% during 2005-2010, then the cumulative
1 Marks profit for the entire period 2000-2010 decreases by:

1) Rs. 1650

2) Rs. 1550

3) Rs. 1300

4) Rs. 1250

Solution:
Cumulative Profit before the change is Rs. 1700

Cumulative Profit after the change is Rs. 150

∴ Change in cumulative profit is Rs. 1700 − Rs. 150 = Rs. 1550

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Hence, option 2.

Group Question

Answer the questions based on the following graph.

[IIFT 2009]

23. Which of the following year exhibited highest percentage decrease over the preceding year in the automobile production?
1 Marks

1) 2005

2) 2006

3) 2007

4) 2008

Solution:
Total Automobile Production is as follows:

Year 2004: 800 + 500 + 475 = 1775

Year 2005: 700 + 550 + 450 = 1700

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Year 2006: 1025 + 675 + 475 = 2175

Year 2007: 1200 + 650 + 475 = 2325

Year 2008: 1250 + 600 + 350 = 2200

2005 and 2008 show a decrease in automobile production.

Hence, option 4.

24. Assume whatever that is not sold domestically was exported, then which year has registered highest growth in exports of
1 Marks automobiles?

1) 2005

2) 2006

3) 2007

4) 2008

Solution:
From the previous solution, we have total Automobile Production for the given years as follows:
2004: 1775;
2005: 1700;

2006: 2175
2007: 2325
2008: 2200

Now, domestic sales can be calculated as:

Year 2004: 700 + 450 + 300 = 1450

Year 2005: 675 + 500 + 350 = 1525

Year 2006: 900 + 625 + 400 = 1925

Year 2007: 1050 + 600 + 375 = 2025

Year 2008: 975 + 550 + 350 = 1875

Exports = Total Production – Domestic sales

∴ Exports for the given years:

2004 = 1775 – 1450 = 325

2005 = 1700 – 1525 = 175

2006 = 2175 – 1925 = 250

2007 = 2325 – 2025 = 300

2008 = 2200 – 1875 = 325

∴ Highest growth in exports was registered in the year 2006 = (250 – 175) = 75

Hence, option 2.

25. If the ratio of the domestic sale price of a commercial vehicle, a passenger vehicle, and a three wheeler is 5:3:2 then what percent of
1 Marks earnings (approximately) is contributed by commercial vehicle segment to the overall earnings from domestic sales during the period
2004-2008?

1) 45%

2) 43%

3) 11%

4) 27%
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Solution:
Total domestic sale for the year 2004-2008:

Commercial vehicles: 450 + 500 + 625 + 600 + 550 = 2725

Passenger vehicles: 700 + 675 + 900 + 1050 + 975 = 4300

Three wheelers: 300 + 350 + 400 + 375 + 350 = 1775

∴ Ratio of the total sale price of commercial vehicles, passenger vehicles and three wheelers = (5 × 2725) : (3 × 4300) : (2 × 1775)

Hence, option 1.

26. For which year were the domestic sales of automobiles closest to the average (2004-2008) domestic sales of automobiles?
1 Marks

1) 2005

2) 2006

3) 2007

4) 2008

Solution:
Average domestic sales of automobiles:
(1450 + 1525 + 1925 + 2025 + 1875) ÷ 5 = 1760

The domestic sales in the year 2008 were closest to the average domestic sales.

Hence, option 4.

27. Which of the following years exhibited highest percentage increase over the preceding year in the automobile sales?
1 Marks

1) 2005

2) 2006

3) 2007

4) 2008

Solution:
From the solution of question 2, we have the sales as follows:

Year 2004 = 1450

Year 2005 = 1525

Year 2006 = 1925

Year 2007 = 2025

Year 2008 = 1875

Subtracting the sales from the previous years, we get increase in the sales for:

Year 2005 = 75;

Year 2006 = 400;

Year 2007 = 100;

Year 2008 shows a decrease.

2006 shows the highest increase, i.e. its percentage increase in the highest.

Hence, option 2.

28. The ratio between absolute increase in domestic sales over preceding year and absolute increase in production over the preceding
1 Marks year is highest during which year?

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1) 2005

2) 2006

3) 2007

4) 2008

Solution:
From the previous solutions;
Increase in domestic sales over the preceding year:
Year 2005 = 75;
Year 2006 = 400;
Year 2007 = 100

Increase in production over the preceding year:

Year 2006 = 475;
Year 2007 = 150

Ratio for the year 2006 = 400 : 475 = 16 : 19

Ratio for the year 2007 = 100 : 150 = 2 : 3

Hence, option 2.

Group Question

Answer the following questions based on the information given below.

Following graph represents the cost per square feet of four retailers from the financial year 2004 to 2012. The expected cost per square feet for
year 2010, 2011 and 2012 are forecasted figures.

[IIFT 2010]

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29. Which retailer shows the sharpest decline in cost per square feet and in which year?
1 Marks

1) Westside, 2005

2) Pantaloon, 2008

3) S. Stop, 2009

4) Vishal, 2010

Solution:
The sharpest decline in cost per square feet will be for a retailer having the maximum slope for the cost line; with the cost per square
feet on the y-axis and years on the x-axis.

Now, since the change in the x-axis i.e. number of years is constant for all 4 options i.e. 1 year, the sharpest decline will be for the
retailer having the maximum drop in the cost per square feet for that particular year.

Decline in cost per square feet for the retailers given in the options is:

Westside, 2005 : 2411 – 1724 = 687

Pantaloon, 2008 : 2044 – 1656 = 388

S.Stop, 2009 : 2419 – 2197 = 222

Vishal, 2010 : 1659 – 1064 = 595

Hence, the sharpest decline is for Westside in the year 2005.

Hence, option 1.

30. Which retailer has shown the maximum increase in its cost per square feet and in which year?
1 Marks

1) S. Stop, 2006

2) S. Stop, 2007

3) Pantaloon, 2006

4) Vishal, 2006

Solution:
The increase in cost per square feet for the retailers in the given options is:

S.Stop, 2006 : 2135 – 1889 = 246

S.Stop, 2007 : 2464 – 2135 = 329

Pantaloon, 2006 : 1996 – 1729 = 267

Vishal, 2006 : 1802 – 1832 = ̶

30

Hence, the maximum increase in cost per square feet among the given options is for S.Stop in 2007.

Hence, option 2.

31. What is the average rate of change in the cost per square feet of the retail sector, if the sector is represented by the above four
1 Marks retailers in the period FY07 to FY10E?

1) –8.12

2) –10.86

3) –6.73

4) None of these

Solution:
The rate of change for the each retailer in the period FY07 to FY10E is

For Pantaloons: {(1396 – 2044)/2044} × 100 = ̶

31.70%

For S. Stop: {(2230 – 2464)/2464} × 100 = – 9.5%

For Vishal: {(1064 – 1751)/1751} × 100 = – 39.23%

For Westside: {(1051 – 1525)/1525} × 100 = –31.08%

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Hence, the average rate of change in the cost per square feet of the retail sector in the period FY07 to FY10E is: (31.70 + 9.5 +
39.23 + 31.08)/4 i.e. – 27.88%

Hence, option 4.

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