Calculating Average Profit from Percentage Profit and Investment

This question asks us to calculate the average profit earned by two companies, ABC and XYZ, in the year 2014. We are given their percentage profits for that year and the amount each company invested.

Analyzing the Provided Data Table

The table shows the percentage profit earned by company ABC and company XYZ from 2011 to 2016. We need the data specifically for the year 2014.

From the table, for the year 2014:

• Percent profit earned by company ABC = 40%
• Percent profit earned by company XYZ = 50%

Understanding Percentage Profit Calculation

Percentage profit is calculated relative to the investment. The formula is:

\(\text{Percentage Profit} = \left( \frac{\text{Profit}}{\text{Investment}} \right) \times 100\)

From this, we can find the actual profit if we know the percentage profit and the investment:

\(\text{Profit} = \left( \frac{\text{Percentage Profit}}{100} \right) \times \text{Investment}\)

Calculating Profit for Each Company in 2014

We are given that each company invested Rs. 20 lakh in 2014.

Profit for Company ABC in 2014:

• Investment by ABC = Rs. 20 lakh
• Percentage profit for ABC = 40%
• Profit for ABC = \(\left( \frac{40}{100} \right) \times 20 \text{ lakh}\)
• Profit for ABC = \(0.40 \times 20 \text{ lakh}\)
• Profit for ABC = Rs. 8 lakh

Profit for Company XYZ in 2014:

• Investment by XYZ = Rs. 20 lakh
• Percentage profit for XYZ = 50%
• Profit for XYZ = \(\left( \frac{50}{100} \right) \times 20 \text{ lakh}\)
• Profit for XYZ = \(0.50 \times 20 \text{ lakh}\)
• Profit for XYZ = Rs. 10 lakh

Calculating the Average Profit

The average profit earned by the two companies is the sum of their individual profits divided by the number of companies (which is 2).

• Total Profit = Profit (ABC) + Profit (XYZ)
• Total Profit = Rs. 8 lakh + Rs. 10 lakh
• Total Profit = Rs. 18 lakh

Now, calculate the average profit:

• Average Profit = \(\frac{\text{Total Profit}}{\text{Number of Companies}}\)
• Average Profit = \(\frac{18 \text{ lakh}}{2}\)
• Average Profit = Rs. 9 lakh

Conclusion

The average profit earned by the two companies, ABC and XYZ, in 2014 was Rs. 9 lakh.

Revision Table: Key Steps for Average Profit Calculation

Additional Information: Understanding Profit and Investment

In business and finance, understanding the relationship between investment, profit, and percentage profit is crucial for analyzing performance.

• Investment: The initial capital or resources put into a business venture.
• Profit: The financial gain, calculated as total revenue minus total expenses (including investment). In the context of percentage profit relative to investment, it often refers to the return generated on the capital invested.
• Percentage Profit: A relative measure of profitability, indicating the profit earned for every 100 units of currency invested. A higher percentage profit generally indicates better efficiency in generating returns from the investment.

Data tables like the one provided are common in data interpretation questions, requiring careful extraction of relevant information and application of basic arithmetic and percentage concepts to solve problems.