A problem for you to solve!?

parc

Ok it's pretty simple but I can't differentiate between these two approaches


Company profits:

2007 = (?)
2008 = £130 mil
% rise in 2008 = +13%

Qst: what was the company profits in 2007

Ok I know the answer is
100%-13% = 87%
130*0.87 = 113.1 million

BUT!

When I use the following method (dividing 130 million by 1.13) I get a different answer??
130/1.13 = 115.04 million


I thought these two methods were exactly the same but the first example is correct. My question is, what is the 2nd one used for?

Thanks

Yakuza

Those percentages represent different things. The first one is a 13% reduction of £130m, the second (correct) way shows what number £130m is 13% greater than (or 113% of).

They are different things completely, you have to read the question carefully to work out which thing you're using.

As phrased, you're told that the rise in profit in 2008 over 2007 is 13%, so then:
[2008 Profit] / [2007 Profit] = 1.13, so [2007 Profit] = [2008 Profit] / 1.13.

If, for example, the profit for 2009 had slumped to 13% less than that of 2008, then the 2009 profit would be what you calculated in your first attempt (130 * .87).

parc

Thanks a lot! That's really helped me understand