Comprehension
Answer the questions based on the following pie charts, which show the break-up of operating profit into Interest, Tax, Retained profit, Dividend and Depreciation.
| Year | Operating Profit (Rs. lakh) | Interest | Tax | Retained profit | Dividend | Depreciation |
|---|---|---|---|---|---|---|
| 1990-91 | 130 | 30% | 9% | 25% | 8% | 28% |
| 1991-92 | 160 | 40% | 12% | 20% | 8% | 20% |
Question: 1
The operating profit in 1991-92 increased over that in 1990-91 by
The operating profit in 1991-92 increased over that in 1990-91 by
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Subtract the 1990-91 operating profit from the 1991-92 operating profit, then divide by the 1990-91 value.
Updated On: Nov 5, 2026
- 25%
- 22%
- 23%
- 24%
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The Correct Option is C
Solution and Explanation
Step 1: Read the operating profit of each year:
The pie-chart table gives an operating profit of Rs. 130 lakh in 1990-91 and Rs. 160 lakh in 1991-92.
Step 2: Find the increase:
Increase = 160 - 130 = Rs. 30 lakh.
Step 3: Express it as a percentage of the 1990-91 profit:
Percentage increase = \(\frac{30}{130} \times 100 \approx 23.08\%\), which is about 23%.
Step 4: Check the options:
A 22% rise would give 130 \(\times\) 1.22 = 158.6 and a 25% rise would give 162.5; a 23% rise gives 159.9, which is very close to 160. So 23% is the best match, and 24% (161.2) is further away.
Final Answer:
The correct option is (3): 23%
The pie-chart table gives an operating profit of Rs. 130 lakh in 1990-91 and Rs. 160 lakh in 1991-92.
Step 2: Find the increase:
Increase = 160 - 130 = Rs. 30 lakh.
Step 3: Express it as a percentage of the 1990-91 profit:
Percentage increase = \(\frac{30}{130} \times 100 \approx 23.08\%\), which is about 23%.
Step 4: Check the options:
A 22% rise would give 130 \(\times\) 1.22 = 158.6 and a 25% rise would give 162.5; a 23% rise gives 159.9, which is very close to 160. So 23% is the best match, and 24% (161.2) is further away.
Final Answer:
The correct option is (3): 23%
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Question: 2
The interest burden in 1991-92 was higher than that in 1990-91 by:
The interest burden in 1991-92 was higher than that in 1990-91 by:
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When given percentages on pie charts, convert them to absolute values before making comparisons.
Updated On: Jul 21, 2026
- 50%
- Rs. 25 lakh
- 90%
- Rs. 41 lakh
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The Correct Option is B
Solution and Explanation
Interest in 1991-92 = 40% of 160 lakh = 64 lakh
Interest in 1990-91 = 30% of 130 lakh = 39 lakh
Difference = 64 - 39 = 25 lakh.
Interest in 1990-91 = 30% of 130 lakh = 39 lakh
Difference = 64 - 39 = 25 lakh.
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Question: 3
If, on an average, 20% rate of interest was charged on borrowed funds, then the total borrowed funds used by this company in the given two years amounted to
If, on an average, 20% rate of interest was charged on borrowed funds, then the total borrowed funds used by this company in the given two years amounted to
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Find the interest paid in each year (a percentage of operating profit), add them, and treat the total as 20% of the borrowed funds.
Updated On: Nov 5, 2026
- Rs. 221 lakh
- Rs. 195 lakh
- Rs. 515 lakh
- Rs. 368 lakh
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The Correct Option is C
Solution and Explanation
Step 1: Interest paid in each year:
1990-91: 30% of 130 = Rs. 39 lakh.
1991-92: 40% of 160 = Rs. 64 lakh.
Total interest = 39 + 64 = Rs. 103 lakh.
Step 2: Link interest to borrowed funds:
Interest is 20% of the borrowed funds, so total borrowed funds = \(\frac{103}{0.20} = 515\) lakh.
Step 3: Cross-check year by year:
1990-91 funds = 39 / 0.2 = Rs. 195 lakh; 1991-92 funds = 64 / 0.2 = Rs. 320 lakh; together 195 + 320 = Rs. 515 lakh. Option (2), Rs. 195 lakh, is only the 1990-91 figure.
Final Answer:
The correct option is (3): Rs. 515 lakh
1990-91: 30% of 130 = Rs. 39 lakh.
1991-92: 40% of 160 = Rs. 64 lakh.
Total interest = 39 + 64 = Rs. 103 lakh.
Step 2: Link interest to borrowed funds:
Interest is 20% of the borrowed funds, so total borrowed funds = \(\frac{103}{0.20} = 515\) lakh.
Step 3: Cross-check year by year:
1990-91 funds = 39 / 0.2 = Rs. 195 lakh; 1991-92 funds = 64 / 0.2 = Rs. 320 lakh; together 195 + 320 = Rs. 515 lakh. Option (2), Rs. 195 lakh, is only the 1990-91 figure.
Final Answer:
The correct option is (3): Rs. 515 lakh
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Question: 4
The retained profit in 1991-92, as compared to that in 1990-91, was
The retained profit in 1991-92, as compared to that in 1990-91, was
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Compute retained profit in rupees for both years (retained % of operating profit) and compare them.
Updated On: Nov 5, 2026
- higher by 2.5%
- higher by 1.5%
- lower by 1.5%
- lower by 2.5%
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The Correct Option is C
Solution and Explanation
Step 1: Retained profit in each year:
1990-91: 25% of 130 = Rs. 32.5 lakh.
1991-92: 20% of 160 = Rs. 32 lakh.
Step 2: Compare:
Change = 32 - 32.5 = -0.5 lakh, so the retained profit has fallen.
Step 3: Percentage change:
\(\frac{0.5}{32.5} \times 100 \approx 1.54\%\), so it is lower by about 1.5%.
Step 4: Check the options:
A fall of 2.5% would be about Rs. 0.81 lakh, which does not match the Rs. 0.5 lakh fall, so (4) is wrong. Options (1) and (2) say "higher", which is wrong.
Final Answer:
The correct option is (3): lower by 1.5%
1990-91: 25% of 130 = Rs. 32.5 lakh.
1991-92: 20% of 160 = Rs. 32 lakh.
Step 2: Compare:
Change = 32 - 32.5 = -0.5 lakh, so the retained profit has fallen.
Step 3: Percentage change:
\(\frac{0.5}{32.5} \times 100 \approx 1.54\%\), so it is lower by about 1.5%.
Step 4: Check the options:
A fall of 2.5% would be about Rs. 0.81 lakh, which does not match the Rs. 0.5 lakh fall, so (4) is wrong. Options (1) and (2) say "higher", which is wrong.
Final Answer:
The correct option is (3): lower by 1.5%
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Question: 5
The equity base of these companies remained unchanged. Then the total dividend earned by the shareholders in 1991-92 is
The equity base of these companies remained unchanged. Then the total dividend earned by the shareholders in 1991-92 is
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The pie chart gives the dividend as a percentage of operating profit; apply the 1991-92 percentage to the 1991-92 operating profit.
Updated On: Nov 5, 2026
- Rs. 104 lakh
- Rs. 9 lakh
- Rs. 15.6 lakh
- Rs. 12.8 lakh
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The Correct Option is D
Solution and Explanation
Step 1: Read the 1991-92 data:
Operating profit = Rs. 160 lakh and the dividend share is 8%.
Step 2: Compute the dividend:
Dividend = 8% of 160 = \(0.08 \times 160 = 12.8\) lakh.
Step 3: Note on the equity statement:
Saying that the equity base is unchanged only means that the shareholders are the same; it does not change the amount distributed. The total dividend is therefore Rs. 12.8 lakh.
Step 4: Check the other options:
Rs. 15.6 lakh does not equal 8% of either year's profit (8% of 130 is Rs. 10.4 lakh); Rs. 9 lakh and Rs. 104 lakh do not equal 8% of any profit figure either.
Final Answer:
The correct option is (4): Rs. 12.8 lakh
Operating profit = Rs. 160 lakh and the dividend share is 8%.
Step 2: Compute the dividend:
Dividend = 8% of 160 = \(0.08 \times 160 = 12.8\) lakh.
Step 3: Note on the equity statement:
Saying that the equity base is unchanged only means that the shareholders are the same; it does not change the amount distributed. The total dividend is therefore Rs. 12.8 lakh.
Step 4: Check the other options:
Rs. 15.6 lakh does not equal 8% of either year's profit (8% of 130 is Rs. 10.4 lakh); Rs. 9 lakh and Rs. 104 lakh do not equal 8% of any profit figure either.
Final Answer:
The correct option is (4): Rs. 12.8 lakh
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