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Revenue Growth of Three Tech Companies

XAT 2012 · Quantitative Ability & Data Interpretation · Medium · Data Interpretation

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Passage / data set

The following graph shows the revenue (in $ million) of three companies in their initial six years of operations, in an economy which is characterized by a persistent inflation.

YearYahooFacebookGoogle
1205020
23010020
35010050
4250300400
56007501500
6120020003200

Question 1 of 3

In 2010, which could be a valid statement about the revenues (adjusted for inflation) of these three companies?

  1. A.

    Revenues of all three companies were equal.

  2. B.

    Revenues of all three companies could be equal.

  3. C.

    Revenue of Yahoo was definitely less than Facebook which was definitely less than Google.

  4. D.

    Total of Yahoo and Facebook was definitely higher than that of Google.

  5. E.

    None of the above.

Answer

E

Explanation

The x-axis represents 'initial six years of operations' rather than absolute calendar years (like 2010). Since we do not know which operational year corresponds to 2010 for each company, data is insufficient.

Question 2 of 3

The difference in the average percentage increase in revenues, from 4th to 6th year, of Yahoo and Facebook is:

  1. A.

    35%

  2. B.

    40%

  3. C.

    45%

  4. D.

    50%

  5. E.

    55%

Answer

B

Explanation

Average annual growth rate rr over 2 years: (1+r)2=R6R4(1+r)^2 = \frac{R_6}{R_4}. For Yahoo: 1200/250−1=4.8−1≈2.19−1=119%\sqrt{1200/250} - 1 = \sqrt{4.8} - 1 \approx 2.19 - 1 = 119\%. For Facebook: 2000/300−1=6.67−1≈2.58−1=158.2%\sqrt{2000/300} - 1 = \sqrt{6.67} - 1 \approx 2.58 - 1 = 158.2\%. Difference ≈159%−119%=40%\approx 159\% - 119\% = 40\%.

Question 3 of 3

What would have been Facebook's revenue (in million)initssixthyearofoperationifthecompanyhadmatchedGoogle′spercentagegrowthinrevenuesfromthefifthtothesixthyear?Choosetheoptionthatisnearesttotheanswer. million) in its sixth year of operation if the company had matched Google's percentage growth in revenues from the fifth to the sixth year? Choose the option that is nearest to the answer.

  1. A.

    1600

  2. B.

    1700

  3. C.

    1900

  4. D.

    2100

  5. E.

    None of the above

Answer

A

Explanation

Google's growth rate from year 5 to 6 = 3200−15001500=17001500=113.33%\frac{3200 - 1500}{1500} = \frac{1700}{1500} = 113.33\%. Facebook's year 5 revenue = 750. If Facebook grew by 113.33%113.33\%, its year 6 revenue = 750×(1+1.1333)=1600750 \times (1 + 1.1333) = 1600 million.

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