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!
