BCG Potential Test

BCG BCG Math BCG Potential Test case math GMAT MBB PST
New answer on Oct 15, 2020
3 Answers
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Anonymous A asked on Oct 14, 2020

Hello,

Does anyone please know how to tackle the attached math word problem?

BCG Potential Test Math Problem

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Anonymous replied on Oct 14, 2020

To calculate gross margin subtract Cost from total revenue and divide that number by total revenue.

In other words, divide the profit by the total revenue. So in the case of the NBA it would be 5/65, and for EBL 4/42 and so on.

So just add up all the profits (5+4+12+2=23) and all the revenues (65+42+67+31=205) and this would be 23/205, or approx 9%. None of the above.

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Anonymous on Oct 16, 2020

PS I believe that this formula is preferable to the other because it makes few sense to sum single margin percentages and divide the total by four, because I wouldn't weigh the margins by the revenue and this wouldn't provide me with a useful business information.

Aisha on Oct 22, 2020

Thank you Stefano

Ian
Expert
Content Creator
updated an answer on Oct 14, 2020
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For formulas, google is your friend!

Get the gross margin formula and calculate it for each individual player. Then, average it out (i.e. add them and divide by 4)

NBA: 5/65 = 7.7%

EBL: 4/42 = 9.5%

CSL: 12/67 = 17.9%

Client: 2/31 = 6.5%

(8.3+10.53+21.82+6.89)/4 = 10.4%

Gross Margin Formula

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Aisha on Oct 22, 2020

Thanks Ian

Mehdi
Expert
replied on Oct 15, 2020
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Hi there,

The gross margin is equivalent to (profit)/(revenue) and in this situation it's (profit)/(profit+costs).

This way you can calculate the exact result and choose the adequate answer.

I hope this helps!

Mehdi

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Aisha on Oct 22, 2020

Thanks Mehdi