% Profit	=	Income	- 1
	100		Expenditure

	Income	=	% Profit	+ 1.
	Expenditure		100

From this it is clear that the ratio of income to expenditure is minimum for the year in which the % Profit has the minimum value. Since, out of given years (i.e., out of 1996, 1997, 1998, 1999 and 2000), the Company has the minimum % profit in the year 1997.

So the minimum ratio of income to expenditure is in the year 1997.

The ratio percentage profit earned to that in the previous year, for different years are:

Clearly, this ratio is minimum for 1997.

Let the expenditure is 1997 be x.

Also, let the incomes in 1997 and 2000 be I₁ and I₂ respectively.

Then, for the year 1997, we have:

45 =	I1 - x	x 100	45	=	I1	-1         I1 =	145x	= 1.45x.
	x		100		x		100

Also, for year 2000, we have:

60 =	I2 - 5x 4	x 100	60	=	4I2	- 1         I2 =	160	x	5x	= 2x.
	5x 4		100		5x		100		4

Difference between the two income = (2x - 1.45x) = 0.55x.

Percentage by which I1 is less than I2 =		0.55x	x 100		% = 27.5%.
		2x