my answers multiple choice (1 Viewer)

juber

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Originally posted by Suney_J
i put down A for 12, but i think im wrong. if u look at year 1 the GP ratio and NP ratio are increasin at exactly the same rate, since sales are common to both, they must be increasin cuz sales are increasin.
the thing is that its a ratio not an actual amount.

The ratios increase, not net or gross profit, so you cant actually claim that sales has increased. the graph simply doesn't tell you that.

Operational expenses do not change, howevor cogs as an expense reduces...
 

Suney_J

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u dont count cogs as an expence. u know this by lookin at yr 2 of the graph, because both A and C state that expences are increasin in yr 2 therefore if cogs is counted as an expence then why didn't the GRR decrease, thats how u know that expences only apply to net profit.
then when u look at yr 1, A says expences decreased, that may b tru but it doesn't say why the GPR increased cuz as we now know expences only aply to net profit.
and shaz was rite in sayin that if sales increase that cogs increase as well, but C stated that an improvement in sales performance and that is slightly different if u can tell the difference.
ne way im in a win-win situaton, if u guys are rite i get a mark, and if ur wrong im rite
 

juber

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Originally posted by Suney_J
u dont count cogs as an expence. u know this by lookin at yr 2 of the graph, because both A and C state that expences are increasin in yr 2 therefore if cogs is counted as an expence then why didn't the GRR decrease, thats how u know that expences only apply to net profit.
then when u look at yr 1, A says expences decreased, that may b tru but it doesn't say why the GPR increased cuz as we now know expences only aply to net profit.
and shaz was rite in sayin that if sales increase that cogs increase as well, but C stated that an improvement in sales performance and that is slightly different if u can tell the difference.
ne way im in a win-win situaton, if u guys are rite i get a mark, and if ur wrong im rite
no, but you see this is where your thinking is wrong..

By the graph, i can tell you that this is what is happening. I will do it in terms of each dollar that goes through the business:

In year one, operational expenses remain constant for each dollar that goes through the business

The amount going through as COGS for each dollar has reduced in year one (this results in the increasing GPR and NPR)

In year 2, the COGS paid for each dollar throughout the business remains the same (i.e 80 cents in the dollar)

howevor operational expenses increase resulting in reduced NPR.

---------------

Ok as long as we can get an agreement on what I have said above, then I can continue to put my arguement forward.

---------------

Ok, now the reason why it has to be A is simply because it is the most correct answer. I dont think its a particularly good question as you are right, you typically link expenses with net profit and not gross profit, but the thing is that its definately not C because you cant say from anything in the graph that sales have improved.

The reason why they havent impvoved, is because this graph would be the same if sales were stronger, weaker or the same. It would have no impact on the shape of the graph.

I think its a stupid question, but the fact is that the graph shows you nothing about sales performance.

Sales performance is a stupid way of wording it as well, cos sales performance to me (and probably the hundreds of others who put A) means increased sales. So if they mean anything more than increased sales then its a stupid and faulty question if the answer is C. Likewise I agree that A also has its faults in that expenses are usually seen as a net profit issue, howevor this is only operational expenses, and i think that there would be arguement that COGS can be seen as an expense (I mean if you werent doing business studies and you thought to yourself if cogs was an expense you would say it was)...

So I think its a stupid question, but if its A, then i would say its the most correct answer, but if its C then its definately a stupid question.

but yeah. the fact is that you cant detirmine increased sales from the graph so C in my mind is invalid. (the only way it could be C is if they mean something more than increased sales, like if they meant something like increased profitablility which would be bullshit because the wording would be attrocious if they meant that)
 

Suney_J

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it isn't the best question, but i jst dont know what u mean juber by how can u determine that sales increased jst by lookin at the graph.
all the graph shows is the trend in GPR and NPR over 2 yrs, nothing less, nothing more. and they're askin u what is the most likely reason the trend occurred choosin from 4 answers, and the reason why i changed my mind is bcuz (A) didn't explain why GPR increased in yr 1, as expences only applied to net profit as i proved above.
 

juber

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Originally posted by Suney_J
it isn't the best question, but i jst dont know what u mean juber by how can u determine that sales increased jst by lookin at the graph.
all the graph shows is the trend in GPR and NPR over 2 yrs, nothing less, nothing more. and they're askin u what is the most likely reason the trend occurred choosin from 4 answers, and the reason why i changed my mind is bcuz (A) didn't explain why GPR increased in yr 1, as expences only applied to net profit as i proved above.
Thats my point...

YOU CANT detirmine that sales has increased...

If what your saying is that "improved sales performance" means somethign else, then i dunno, but if "improved sales performance" means something more than just an increased volume of sales, then its a stupid question because thats what it implies.

Now A i dont believe is entirely correct either based on its wording, but it is the most correct answer based on the "reduced expenses" being taken as a reduction in COGS (which apart from Business studies HSC textbook definition would be regarded as a cost within a business).

See if your saying that improved sales performance does not mean just increased sales but rather other things such as increased profitability etc, then I can see what your saying, but I just dont see that as a very good wording, because "improved sales performance" to me quite plainly means increased sales.
 

Suney_J

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but we are business studies students, and it was a business studies exam, so expences only applies to net profit.
 

juber

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well yes, maybe so, and thats the flaw in the answer being A, but then it is a more appropriate answer than C....

(Just cos A is not a great answer, dont make C correct)
 

Suney_J

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so we're agreed?, it all comes down to what they mean by "improved sales performance"
 

juber

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Originally posted by Suney_J
so we're agreed?, it all comes down to what they mean by "improved sales performance"
well if you interpreted "improved sales performance" as something other than increased sales then yes, we are in aggrement.

But yeah. See i reckon they should accept both cos I can see where your coming from.
 

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