Work Example Question 1 1 Question: Assuming one quarter of the revenue generated in 2008 was profit, how much profit did Lucy and Laura make that year? Answers: $13,500 $3,375 $2,250 $1,125 1) Start by calculating one quarter of the revenue from 2008: 25% x $30,000 = $7,500 2) Work out Lucy and Laura's profit share 15% + 30% = 45% 3) Calculate their share of the $7,500 profit. 45% x $7,500 = $3,375 Incorrect answers: $13,500 This answer is incorrect because it assumes all the revenue from 2008 was profit. 30,000 x (15% + 30%) = 13,500 $2,250 This answer is incorrect because it only accounts for Laura's share of the profit, not Lucy's as well (30,000 x 25%) x 30% = 2,250 $1,125 This answer is incorrect because it only accounts for Lucy's share of the profit and not Laura's. (30,000 x 25%) x 15% = 1,125 2 Question: What was the ratio of revenue generated in 2006 and 2007 compared to that of 2010 and 2011? Answers: 1 to 0.96 0.96 to 1 0.98 to 1 1 to 0.93 1) Calculate the total revenue generated in 2006 and 2007: $27,000 + $28,000 = $55,000 2) Calculate the total revenue generated in 2010 and 2011: $25,000 + $28,000 = $53,000 3) Calculate the ratio of revenue generated in 2006 and 2007 compared to that of 2010 and 2011. $53,000 / $55,000 = 1 : 0.96
Wrong answers: 0.96 to 1 This answer is incorrect because this represents the ratio of 2010 and 2011 revenue to 2006 and 2007 revenue, it is, therefore the wrong way around. A simple check could have spotted this. You can just look at which is bigger 1) The total revenue generated in 2006 and 2007: $27,000 + $28,000 = $55,000 2) The total revenue generated in 2010 and 2011: $25,000 + $28,000 = $53,000 We can see that the 2006 and 2007 revenue is larger so the larger number will precede the smaller number in the ratio, i.e. it'll be 1 to 0.96. 0.98 to 1 This answer uses the 2005 and 2006 figures and compares them to the 2010 and 2011 figures. Be sure to read the information from the graphs carefully. 1) The total revenue generated in 2005 and 2006: $25,000 + $27,000 = $52,000 2) The total revenue generated in 2010 and 2011: $25,000 + $28,000 = $53,000 To calculate the ratio: $52,000 / $53,000 = 0.98 Ratio is, therefore: 0.98 to 1 1 to 0.93 This answer uses the 2008 and 2009 figures and compares them to the 2010 and 2011 figures. Again make sure you read the graphics carefully. 3 Question: Assuming Revenue = Profits in 2011 and that profits are shared out after paying Amy and Sarah salaries of $2,500 Answers: and $3,700 respectively, to how much of the profit generated in 2011 would Laura and Lucy each be entitled? $9,810 $12,600 $15,400 cannot say 1) Calculate the residual revenue after paying Amy and Sarah's salaries: $28,000 - $2,500 - $3,700 = $21,800 2) Calculate Laura and Lucy's share of the residual revenue / profit. 15% + 30% = 45% 3) Calculate their share of profit in monetary terms: 45% x $21,800 = $9,810
Incorrect answers: $12,600 This answer fails to deduct the salaries paid out to Amy and Sarah. These must be deducted from the annual profit figure. (15% + 30%) x 28,000 = 12,600 $15,400 This answer calculated Amy and Sarah's share of the profits after paying them their annual salaries. (35% + 20%) x 28,000 = 15,400 Cannot say This answer assumes you do not know the profit figure for 2011 since the graph only shows revenue (sales). In fact the question explains that profit is equal to revenue so you can calculate the correct answer. 4 Question: What was the percentage increase in revenue generated by the partnership from 2005 to 2006? Answers: 8% 7% 4% 2% 1) Calculate the increase in revenue from 2005 to 2006: $27,000 - $25,000 = $2,000 2) Calculate the percentage increase, by dividing the increase by the original number: tip: an easy way to do this is to remember to calculate the difference between the old number and the new number then divide by the old number. $2,000 x 100 $25,000 = 8% Incorrect answers 7% This answer divides the difference between the 2005 and 2006 revenue by the 2006 figure not the 2005 figure: ($27,000 - $25,000) / $27,000 x 100 = 7% 4% This answer uses the 2006 and 2007 figures not to 2005 and 2006 figures. Take time to read the graph carefully. ($28,000 - $27,000) / $27,000 x 100 = 4% 2% This answer assumes that the difference between the 2007 and 2006 figures, which is $2,000, is the same as the percentage change. This is incorrect.
Work Example Question 2 1 Question: How many more US Dollars could you buy with 2000 Canadian Dollars in 2012 compared to 2013? Answers: $362 $103 $1,000 less $407 1) Calculate how many US dollars you could buy in 2012 with 2,000 Canadian dollars in 2012. CAD 2000 / 1.43 = $1,398.60 2) Calculate how many US dollars you could buy with 2,000 Canadian dollars in 2013. CAD 2000 / 1.93 = $1,036.27 3) Calculate the difference between the two amounts $1,389.60 - $1,036.27 = $362 Incorrect answers $103 This answer uses the EURO rate instead of the USD rate, be careful to read the table carefully. CAD 2000 / 1.83 = $1,092.89 CAD 2000 / 2.02 = $990 $1,092.89 - $990 = $102.89 $1,000 less This answer is produced from doing the calculation the wrong way around: CAD 2000 x 1.43 = $2,860 CAD 2000 x 1.93 = $3,860 $3,860 - $2860 = $1,000 This answer uses the GBP rate instead of the USD rate, be careful to read the table carefully. CAD 2000 / 1.29 = $1,550 CAD 2000 / 1.75 = $1,143 $1,550 - $1,143 = $407 2 Question: What was the percentage change in the value of the US Dollar compared to the Canadian Dollar from 2012 to 2013? Answers: 9% increase 10% increase 26% increase 35% increase 1) Take a quick look and see whether the US dollar has appreciate or depreciated against the Canadian dollar from 2012 to 2013. 1 CAD would buy you US$1.43 in 2012 and US$1.93 in 2013 so the CAD has appreciated in value. 2) Calculate the difference between the rate in 2012 and the rate in 2013: 1.93-1.43 = 0.5 3) Divide the difference by the original rate i.e. The 2012 rate: 0.5 / 1.43 x 100 = 34.9%
Incorrect answers 26% This answer has taken the difference between the 2013 and 2012 rates and divided this by the 2013 rate not to 2012 rate. (1.93-1.43) / 1.93 x 100 = 25.9% 10% This answer has used the EURO rate instead of the US dollar rate (2.02-1.83) / 2.02 x 100 = 9.4% 9% This answer used the EURO rate instead of the USD rate and divided the difference between the 2013 and 2012 rates by the 2013 rate, not the 2012 rate. (2.02-1.83) / 1.83 x 100 = 10% 3 Question: Which currency appreciated in value the most against the Canadian Dollar between 2012 and 2013? Answers: GBP EUR USD JPY 1) Take a look at which currencies appreciated the most against the Canadian Dollar between 2012 and 2013. It's possible to see the JPY depreciated so this can be eliminated immediately. 2) Calculate the percentage change in the value of the others by calculating the difference between the 2012 rate and the 2013 rate and then dividing by the 2012 rate - the original rate. For the solution in this question (GBP) this was calculated as: 1.75-1.29 = 0.46 0.46 / 1.75 x 100 = 35.6% Wrong answers; these all depreciated less than the GBP Percentage change in the value of: EURO (2.02-1.83) / 1.83 x 100 = 10% stronger USD (1.93-1.43) / 1.43 x 100 = 34.9% stronger JPY (2.02-1.43) / 2.02 x 100 = 29% weaker 4 Question: If 5,000 Canadian Dollars were used to purchase Euros in 2012 how much approximately would it be worth in 2013 in CAD? Answers: 4,530 CAD 5,519 CAD 6,748 CAD 6,783 CAD 1) Calculate how many Euros, $5000 CAD would be worth in 2012. 5000 CAD / 1.83 = 2,732 EUR 2) Convert the Euros back into Canadian dollars using the 2012 rate. EUR 2,732 * 2.02 = CAD5,518.64
Incorrect answers 4,530 CAD This calculates the change the opposite way around. The Euro has strengthened against the CAD not weakened. 1) Calculate how many Euros, $5000 CAD would be worth in 2012. 5000 CAD x 1.83 = 9,150 EUR 2) Convert the Euros back into Canadian dollars using the 2012 rate. 9150 / 2.02 = 4530 6,748 CAD This answer uses the USD rates rather than the EURO rates: 5000 CAD / 1.43 = 3,496.5 3,496.5 * 1.93 = 6,748 6,783 CAD This answer uses the GBP rates rather than the EURO rates: 5000 CAD / 1.29 = 3,875.97 3,875.97 x 1.75 = 6,783 CAD