Denoma's revenue

[This topic has 1 expert reply and 18 member replies]
Forum Index GMAT Verbal & Essays Critical Reasoning
Free $100 Amazon.com Gift Card - Buy a GMAT course using a Beat The GMAT discount code between Mar 8-22 and get a $100 Amazon.com Gift Card. Learn more!
Post New Topic   Post Reply

lilu
Really wants to Beat The GMAT!

Default Avatar

Joined: 10 Dec 2008
Posts: 148

Thanks given: 36
Thanked 11 times in 11 posts
Location: SF, CA

Test Date: May 14th, 2009
Target GMAT Score: 700+
Topic: Denoma's revenue
PostThu Apr 09, 2009 10:32 pm
Elapsed Time:
00:00
 Lap   Why a timer is critical to improving your score
Denoma, a major consumer-electronics maker, had a sizeable decline in sales revenue for its most recent fiscal year. This result appears surprising, because electronics retailers report that although their overall sales were considerably lower than in the previous year, their sales revenue from Denoma models actually grew, largely thanks to some innovative and popular models that Denoma introduced.

Which of the following, if true, does most to explain the apparently surprising result?

A. Because of the need to educate the public about its new models' capabilities, Denoma's advertising spending was higher than normal over the period.
B. For the period at issue, Denoma's major competitors reported declines in revenue that were, in percentage terms, greater than Denoma's.
C. A significant proportion of Denoma's revenue comes from making components for other consumer-electronics manufacturers.
D. Unlike some of its major competitors, Denoma has no lines of business outside consumer electronics to provide revenue when retail sales of consumer electronics are weak.
E. During the period, consumer-electronics retailers sold remaining units of Denoma's superseded models at prices that were deeply discounted from those models' original prices.

OA is C
Back to top
View user's profile Send private message
gmat740
Moderator



Joined: 16 Aug 2008
Posts: 1189

Thanks given: 20
Thanked 58 times in 56 posts
Location: Kolkata,India

GMAT Score: 710
PostThu Apr 09, 2009 11:09 pm
Case I:
Denoma (D) ==> sales revenue reduced

Case II:

Retailers say the sales revenue of the D- Models have increased!!

we have to go for that option, in which both the conditions exist, but we can provide an alternate explanation for one of the phenomenon provided, the existance of the other case remains


Quote:
A. Because of the need to educate the public about its new models' capabilities, Denoma's advertising spending was higher than normal over the period.
we are talking about sales revenue

so reject this one

Quote:
B. For the period at issue, Denoma's major competitors reported declines in revenue that were, in percentage terms, greater than Denoma's
so what??
does this address the retailer's case?


Quote:
C. A significant proportion of Denoma's revenue comes from making components for other consumer-electronics manufacturers
.

So even if there is an increase in sales revenue from the retail, D-company is not able to increase its sales revenue because it's major part of revenue comes from making components for other consumer-electronics mfg's

so they must not be buying D-company's products,so D-is losing revenue




rest of the options are as bad as they can be

let me know if you have other doubts in this

Karan
Back to top
View user's profile Send private message
mbadrew
Really wants to Beat The GMAT!

Default Avatar

Joined: 12 Feb 2008
Posts: 198

Thanks given: 2
Thanked 13 times in 12 posts
Location: San Francisco

Test Date: 2009
Target GMAT Score: 700+
PostFri Apr 10, 2009 5:04 pm
Karan,

please elaborate. Break it down for us. Is the question asking for an assumption or an inference? If it's an assumption than C is the answer, but if it's asking for an inferece then E seems like the correct answer. What are the distinguishing characters?

thanks
Andrew
Back to top
View user's profile Send private message
kirvar
Just gettin' started!

Default Avatar

Joined: 13 Mar 2009
Posts: 21

Thanks given: 4
Thanked 1 times in 1 posts
PostFri Apr 10, 2009 8:12 pm
E cannot be right answer because it's retailers who sold the models at deep discounts and not Donema.

C is the only statement that can reconcile the paradox by giving an alternative and removing the emphasis from sales of new/old models
Back to top
View user's profile Send private message
gmat740
Moderator



Joined: 16 Aug 2008
Posts: 1189

Thanks given: 20
Thanked 58 times in 56 posts
Location: Kolkata,India

GMAT Score: 710
PostFri Apr 10, 2009 8:50 pm
Quote:
please elaborate. Break it down for us. Is the question asking for an assumption or an inference?
Inference is something which proceeds the argument

eg: Argument==> Karan is a topper in his class.And toppers are good leaders

Inference==> karan is a good leader!!

Assumption is something which is unstated, but for the argument to be true,the assumption must have to be true.


Quote:
C is the only statement that can reconcile the paradox by giving an alternative and removing the emphasis from sales of new/old models
This is the what we have to do

We have to resolve the paradox

where both situation exist and we can provide an alternate explanation as to why two contradicting situations can exists simultaneously!!
Back to top
View user's profile Send private message
mbadrew
Really wants to Beat The GMAT!

Default Avatar

Joined: 12 Feb 2008
Posts: 198

Thanks given: 2
Thanked 13 times in 12 posts
Location: San Francisco

Test Date: 2009
Target GMAT Score: 700+
PostSat Apr 11, 2009 10:42 am
Kirvar & Karan,

thanks for the clarification guys.


Andrew
Back to top
View user's profile Send private message
maihuna
GMAT Titan

Default Avatar

Joined: 28 Dec 2008
Posts: 1213

Thanks given: 46
Thanked 42 times in 42 posts

GMAT Score: 690
PostWed Jul 22, 2009 5:56 am
Hi,
ME AND AJ discussed it offline. More than the answer and explanation I am more interested in source of this quetion? Was it an official question.

I choosed E and reason is it is at least showing one reason why even if retailer are getting increased revenue D is not able to have increased revenue, retailers are selling old model...

If the source is not OG/Gmatprep I would like to treat this question as an garbage, if its an OG/Gmatprep I would like if some one can share the OE..
_________________
defeat accepted, I am tired, down and out, surprisingly it is quant that betrayed me all the times, and I know my limit for verbal, 47 37 690, yep %tile is changing with same raw.
Back to top
View user's profile Send private message
pandeyvineet24
GMAT Destroyer!

Default Avatar

Joined: 02 Jun 2008
Posts: 526

Thanks given: 4
Thanked 12 times in 12 posts
Location: Atlanta

Target GMAT Score: 720
PostWed Jul 22, 2009 11:00 am
I picked A. will not the cost of advertisement offset the revenue sales ?
Back to top
View user's profile Send private message
shibal
GMAT Destroyer!

Default Avatar

Joined: 18 Mar 2009
Posts: 321

Thanks given: 15
Thanked 10 times in 10 posts
Location: Sao Paulo-Brazil

Test Date: July XX
Target GMAT Score: 680+
PostWed Jul 22, 2009 11:08 am
IMO C, even though the sales grew, they are not the only variable responsible for Denoma`s revenues. If the other participants` revenues decreased and Denoma acts as a 3rd party, the revenues from this service will decrease, hence the Denoma`s results wont be as good as they would if it only considered the sales of its own products.
Back to top
View user's profile Send private message
Musicolo
Really wants to Beat The GMAT!

Default Avatar

Joined: 01 Feb 2009
Posts: 116

Thanks given: 0
Thanked 0 times in 0 posts
PostWed Jul 22, 2009 11:31 am
Both A and E sound better then C. Whatever source this is from and whatever you guys say, C seems totally irrelevant, out of scope or assuming too many things. Maybe its mistake if its from Kaplan. Kaplan is full of mistakes.
Back to top
View user's profile Send private message
mehravikas
GMAT Titan

Default Avatar

Joined: 12 May 2008
Posts: 1162

Thanks given: 29
Thanked 16 times in 16 posts
Location: Sydney

Test Date: ********
Target GMAT Score: 740
PostWed Jul 22, 2009 2:29 pm
It should be E...because the argument says:

electronics retailers report that although their overall sales were considerably lower than in the previous year, their sales revenue from Denoma models actually grew
Back to top
View user's profile Send private message
bignasty666
Rising GMAT Star

Default Avatar

Joined: 10 Jul 2009
Posts: 79

Thanks given: 0
Thanked 0 times in 0 posts
PostFri Jul 24, 2009 2:36 am
just merelt agreeing with the OA will not do the job. C is clearly wrong. Even if the company's part of revenue does come from supplying to other manufacturers HOW DOES IT EXPLAIN THE DECLINE IN THE REVENUE?? HAS IT BEEN STATED THAT THE COMPANY'S SALES TO THESE "OTHER MANUFACTURERS" DECLINED? if this was stated then C would have been an answer.

E is a better choice since it states that the retailers sold the new models of products at a discounted rate and hence achieved good sales. This was the reason why the manfacturers revenue declined..

In any case messed up question.
Back to top
View user's profile Send private message
pranav
Just gettin' started!

Default Avatar

Joined: 20 Dec 2007
Posts: 20

Thanks given: 0
Thanked 0 times in 0 posts
PostFri Jul 24, 2009 6:51 am
E states that retailers sold old models of Denoma.
While the question stem states that the revenue of retailers were due to some innovative and popular models that Denoma introduced.
Hence E cannt be the correct answer.

A states that advertising expense was more. This will affect the profit margins and not sales revenue.

So, by POE, only C explains the decline in sales revenue
Back to top
View user's profile Send private message
doclkk
Really wants to Beat The GMAT!

Default Avatar

Joined: 07 Apr 2009
Posts: 177

Thanks given: 26
Thanked 3 times in 3 posts

Test Date: Sept 11
Target GMAT Score: 700+
GMAT Score: ~660
PostFri Jul 24, 2009 9:36 am
Musicolo wrote:
Both A and E sound better then C. Whatever source this is from and whatever you guys say, C seems totally irrelevant, out of scope or assuming too many things. Maybe its mistake if its from Kaplan. Kaplan is full of mistakes.
It's not A for sure.

Because its talking about revenue not profits.

Cost has nothing to do with revenue.

Your right E is plausible but it conflicts with a stimulus. So E would be a last resort.

C works. It's not super clear but it makes sense.

BTW, this is a gmat prep question so its legit.

Why do so many people here bash Kaplan? Their user interface and labs are really good - the former of which better than any other prep company.
Back to top
View user's profile Send private message
maihuna
GMAT Titan

Default Avatar

Joined: 28 Dec 2008
Posts: 1213

Thanks given: 46
Thanked 42 times in 42 posts

GMAT Score: 690
PostFri Jul 24, 2009 10:05 am
Guys it makes sense in following way, in fact I saw an article yesterday about a semi-conductor company giving similar reasons, so seems realistic.

The retailers are making more money, of course it is mentioned on older models, while step mentions newly innovative etc, whatever be the reason, if the company makes most of its revenue by selling components to other companies even though it made money from retailer segment(assuming it is generating some revenue from some end-user perspective), if the revenue from component sale is sub-dude then overall revenue will decline.
But we are making some assumption here, in fact a lot, i.e. those component making companies are not doing well or not buying more from Deno... this is not an un-warranted assumption, but quite far, and I dont think necessarily true.

This makes te choice vague, but definetly plausible having the above assumption.
_________________
defeat accepted, I am tired, down and out, surprisingly it is quant that betrayed me all the times, and I know my limit for verbal, 47 37 690, yep %tile is changing with same raw.
Back to top
View user's profile Send private message
Display posts from previous:   

Post New Topic   Post Reply All times are GMT - 7 Hours
Goto page 1, 2  Next
Page 1 of 2
 
Forum Index GMAT Verbal & Essays Critical Reasoning
Most Active Members in Last 30 Days
1. harsh.champ 625 posts
2. shashank.ism 465 posts
3. ajith 370 posts
4. money9111 353 posts
5. thephoenix 349 posts
See More Top Beat The GMAT Members
Most Active Experts in Last 30 Days
1. lunarpower
Manhattan GMAT Teacher 		85 posts
2. Stuart Kovinsky
Kaplan GMAT Teacher 		70 posts
3. Lisa Anderson
Stacy Blackman Consulting 		50 posts
4. Testluv
Kaplan GMAT Teacher 		50 posts
5. Stacey Koprince
Manhattan GMAT Teacher 		35 posts
See More Top Beat The GMAT Experts