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These questions are based on the situation given below:
The figure below presents sales and net profit, in Rs. Crores, of IVP Ltd for the five years from 1994-95 to 1998-99. During this period, the sales increased from Rs.100 Crores to Rs. 680 Crores. Correspondingly, the net profit increased from Rs. 2.5 Crores to Rs. 12 Crores. Net profit is defined as the excess of sales over total costs.
Defining profitability as the ratio of net profit to sales, IVP Ltd. recorded the highest profitability in
Profitability in the year 1994-95 is 2.5/100 = 2.5%
Profitability in the year 1995-96 is 4.5/250 = 1.8%
Profitability in the year 1996-97 is 6/300 = 2%
Profitability in the year 1997-98 is 8.5/290 = 2.93%
Profitability in the year 1998-99 is 12/680 = 1.76%
Hence, the profitability is maximum in the year 1997-98
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