Company Spokesperson: This year, more than 70% of the guests who stayed with us over the past summer are planning to return to our resorts for a summer vacation. Therefore, I believe that we are well-positioned for another strong and profitable quarter.
Industry Analyst: This is not necessarily true. Nearly three quarters of the company's profits come from the attendance of its theme parks located at its major resorts, and it is not certain how this segment will perform this summer.
Which of the following statements, if true, would support the criticism of the Industry Analyst?
The company management anticipates strong financial results merely based on the evidence that many of the previous year’s guests are planning to return this summer. The industry analyst disagrees with this projection, claiming that the firm’s profits are largely driven by the attendance of the theme parks and their performance is uncertain. To strengthen the position of the industry analyst, we need to demonstrate that a high rate of returning customers is not necessarily sufficient to yield strong financial results for the company’s theme parks, which account for the vast majority of the firm’s profits.
(A) If the management possesses more accurate financial information, this evidence would weaken rather than strengthen the claim of the industry analyst.
(B) The issue of analyst affiliation is outside the scope of the argument. While the independence of the analyst suggests an unbiased projection, it does not necessarily lead to a more accurate projection. For example, an analyst who is connected to the company may be privy to inside information resulting in a more accurate forecast than one from an independent analyst.
(C) Since both the management and the industry analyst are concerned with the discussion of future rather than historical performance, this statement is outside the scope of the argument. If anything, a strong past record would undermine rather than support the analyst’s claim.
(D) This answer choice demonstrates the importance of summer business for the firm’s operations but provides no information regarding the future outlook, thus neither strengthening nor weakening the argument of the industry analyst.
(E) CORRECT. This answer supports the claim of the industry analyst by demonstrating that the company is unlikely to generate substantial profits from the high number of returning guests. If the vacationers visiting the company’s resorts attend its theme parks only once, the high number of returning customers is unlikely to benefit the firm’s theme parks, which account for the vast majority of the company’s profits.
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