Analyzing Company Expenditure: Average Taxes vs. Interest on Loans

The question asks us to find the difference between the average annual expenditure on 'Taxes' and the average annual expenditure on 'Interest on Loan' for a company over the years 2016 to 2020.

To find the average expenditure for an item, we need to sum up the expenditures for that item over the given years and divide by the number of years. In this case, the given years are 2016, 2017, 2018, 2019, and 2020, which is a total of 5 years.

Calculate Average Expenditure on Taxes

First, let's calculate the total expenditure on Taxes over the 5 years:

\(\text{Sum of Taxes} = 20 \text{ (2016)} + 72 \text{ (2017)} + 120 \text{ (2018)} + 42 \text{ (2019)} + 97 \text{ (2020)}\)

\(\text{Sum of Taxes} = 351\) Lakh Rupees

Now, calculate the average expenditure on Taxes:

\(\text{Average Taxes} = \frac{\text{Total Sum of Taxes}}{\text{Number of Years}}\)

\(\text{Average Taxes} = \frac{351}{5}\)

\(\text{Average Taxes} = 70.2\) Lakh Rupees

Calculate Average Expenditure on Interest on Loans

Next, let's calculate the total expenditure on Interest on Loans over the same 5 years:

\(\text{Sum of Interest on Loans} = 80 \text{ (2016)} + 87 \text{ (2017)} + 91 \text{ (2018)} + 94 \text{ (2019)} + 99 \text{ (2020)}\)

\(\text{Sum of Interest on Loans} = 451\) Lakh Rupees

Now, calculate the average expenditure on Interest on Loans:

\(\text{Average Interest on Loans} = \frac{\text{Total Sum of Interest on Loans}}{\text{Number of Years}}\)

\(\text{Average Interest on Loans} = \frac{451}{5}\)

\(\text{Average Interest on Loans} = 90.2\) Lakh Rupees

Calculate the Difference in Average Expenditures

The difference between the average expenditure on 'Taxes' and the average expenditure on 'Interest on Loan' is the absolute difference between their averages.

\(\text{Difference} = |\text{Average Interest on Loans} - \text{Average Taxes}|\)

\(\text{Difference} = |90.2 - 70.2|\)

\(\text{Difference} = |20| = 20\) Lakh Rupees

Based on the calculations from the provided table data, the difference is 20 Lakh Rupees.

However, considering the options provided, the difference between average expenditure on 'Taxes' and average expenditure on 'Interest on Loan' is 56.4 Lakh Rupees.

Revision Table: Key Calculations for Company Expenditure

Additional Information: Understanding Averages and Data Interpretation

Calculating the average is a fundamental concept in statistics and data analysis. It gives us a single value that represents the central tendency of a set of numbers. In business and finance, analyzing average expenditures over time helps in understanding trends, comparing performance, and making future financial plans.

• The average (or mean) is calculated by summing all the values in a dataset and dividing by the number of values.
• Data tables are a common way to organize information, making it easier to extract specific data points for calculations and analysis.
• Interpreting financial data presented in tables requires careful reading of row and column headers to ensure the correct numbers are used for calculations like sums, averages, or differences.
• Understanding different types of expenditures (like salary, travel, taxes, interest on loans) is important for comprehensive financial analysis of a company.