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Public Service Entrance Exam (PSEE) · Question

A report states that 'Expenditures increased by 10% in Q1 compared to Q4, while revenue decreased by 5% over the same period.' What is the net impact on the department's financial position?

Increased expenditures and decreased revenue both negatively impact profitability. This combination indicates a probable decline in financial performance.

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Question: A report states that 'Expenditures increased by 10% in Q1 compared to Q4, while revenue decreased by 5% over the same period.' What is the net impact on the department's financial position?

Answer options:

  • Both profitability and liquidity improved. ✅ Profitability likely declined.
  • Liquidity improved, but profitability declined.
  • Profitability likely improved.

Correct answer: Profitability likely declined.

Explanation: Increased expenditures and decreased revenue both negatively impact profitability. This combination indicates a probable decline in financial performance.

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