A company making $1 million profit after expenses one quarter that loses $1 million the next quarter has seen a 200% decrease in profits.
Understand the Problem
The question is discussing the concept of profit and how to calculate the percentage decrease from a profit of $1 million to a loss of $1 million. It implies a misunderstanding of how to calculate percentage decreases in financial contexts.
Answer
The statement is incorrect. The company experienced a 200% decrease in profits.
The statement that a company making $1 million in profit one quarter that loses $1 million the next quarter has seen a 200% decrease is incorrect. A decrease from a $1 million profit to a $1 million loss is a 200% decrease, not simply because it's an error in percentage change calculation.
Answer for screen readers
The statement that a company making $1 million in profit one quarter that loses $1 million the next quarter has seen a 200% decrease is incorrect. A decrease from a $1 million profit to a $1 million loss is a 200% decrease, not simply because it's an error in percentage change calculation.
More Information
Percentage change is calculated relative to the original value. In this case, going from +$1 million to -$1 million is a drop of $2 million, which is 200% of the original $1 million profit.
Tips
A common error is misunderstanding percentage decreases, especially when dealing with negative values. Always consider the entire change in value relative to the original.
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