One of the questions many GMAT students ask is “why do we have to take this [insert colorful word] test anyway?” There is despair and frustration evident in the question—I want to be a management consultant, for heaven’s sake, why am I studying exponents?
While I believed very strongly that the admissions tests were indeed relevant and always said so, I lacked the real-world business school examples to back up my claims. Until now.
After less than a semester of business school, knowledge of the following GMAT (and GRE) topics have already proven indispensable to my success:
1) Fractions: Oh yes, it’s third-grade math back to haunt you! Specific example? In Accounting, we study various financial ratios that determine the health of the business. For instance, the current ratio, a measure of solvency, is calculated by dividing current assets by current liabilities. A question that appeared on my midterm read as follows: If a company sells land for cash at a loss, how does that affect the current ratio? To answer this question, you need to know how a fraction changes when the numerator goes down and the denominator stays the same. My professor could ask this question about any financial ratio, numerator or denominator.
2) Reading Comprehension: In my Management class, we are assigned anywhere from 20-70 pages of reading each week, most of it dense theoretical stuff, some of it highly-detailed case study. There is very little review of the material in class—you are expected to come having read it and ready to discuss your analysis of the work. Woe to he who comes underprepared, or having focused on the wrong details! (I’ve seen it happen—it’s ugly.) Reading lots of dense prose quickly and being able to cut through the detail to get at the important bits—sounds a lot like Reading Comp to me.
3) Essay Writing: My final in the aforementioned Management class will consist of 10 short-form essay questions, such as “Discuss the structural changes that typically occur as small start-up firms grow and mature. Explain why these changes typically occur. Explain how management needs to adapt its leadership style as their firm grows and matures.” It’s a three-hour test, so I will have 18 minutes to read, digest, formulate a response based on 4 months’ worth of course material, and write up a reply to each. At least the GMAT gives you 30 minutes!
4) Order of Operations (PEMDAS): This might actually be first-grade math, back again with a vengeance in b-school. In learning about the time value of money, we learned an equation represented by the following (take a deep breath):
PVannuity = (FVannuitypmt /i)∗[1-1/(1+i)n]
Can you guess what happened when my classmates attempted this equation? Yep, quite a few of them got zero. Why? Because when the equation is written horizontally, the numerator of the rightmost fraction appears to be 1-1…or zero. But, if you recall Order of Operations, or PEMDAS, from your GMAT (or GRE) preparations, you’ll remember that division comes before subtraction, and divide 1 by (1+i)n before subtracting the whole thing from 1. Could the prof have written the equation more clearly? Sure. But did knowing my order of operations make the problem easier? Heck yes.
Oh and by the way, that particular equation also contains exponents. So yeah, those? Also relevant.
So, I’m not even done with my first semester, and already these topics appear, completely relevant to what I’m studying. I am an even more firm believer now that the skills tested on standardized tests map to the skills needed to succeed in business school. As tempting as it is to shrug off these exams as nonsense…would you have read the present-value equation correctly the first time? If you studied your PEMDAS, you would.
Article authored by Amanda d’avria, courtesy Kaplan GMAT. Image courtesy valdosta.edu