A company has only two divisions

A company has only two divisions: Division A and Division B. Last year, Division A made 60% of the company’s total revenue and Division B made 40% of the total revenue. This year, Division A’s revenue has decreased by 35% and Division B’s revenue has decreased by 5%. Which division had higher revenue this year?

The correct answer and explanation is:

Let’s analyze the revenue for both divisions.

Step 1: Define Variables

  • Let the company’s total revenue last year be 100 units (for simplicity).
  • Division A’s revenue last year = 60% of 100 = 60 units
  • Division B’s revenue last year = 40% of 100 = 40 units

Step 2: Calculate This Year’s Revenue

  • Division A’s revenue decreased by 35% → New revenue = 60 – (35% of 60) = 60 – 21 = 39 units
  • Division B’s revenue decreased by 5% → New revenue = 40 – (5% of 40) = 40 – 2 = 38 units

Step 3: Compare the Revenues

  • Division A’s revenue this year = 39 units
  • Division B’s revenue this year = 38 units
  • Division A still has the higher revenue this year.

Explanation

Even though Division A faced a larger percentage decrease (35%) compared to Division B (5%), it started with a significantly higher revenue base last year. As a result, even after the decline, Division A’s revenue remains higher than Division B’s.

If we examine the absolute revenue lost:

  • Division A lost 21 units (from 60 to 39).
  • Division B lost 2 units (from 40 to 38).

Since Division A had a much larger starting revenue, its final revenue, despite the sharp decline, remains above that of Division B.

Thus, Division A had the higher revenue this year.

Now, I will generate an image representing the revenue changes for both divisions.

Here is the business infographic illustrating the revenue changes for Division A and Division B. It visually represents how both divisions’ revenues declined and highlights the final amounts after the decrease. Let me know if you need any modifications!

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