About Placement Paper Practice
Placement paper questions are the ones a candidate meets on the way in and on the way out: the rounds a recruitment process runs through, the arithmetic of a cost to company, a take home salary, a bond and a gratuity, how long a notice period is, what a company means by attrition and utilisation, and what happens in the first year. This topic covers that ground on one page, with the working that turns an offer letter into a monthly figure.
What you need to understand
- A campus recruitment process usually runs through an online test of aptitude and sometimes coding, then a technical interview, then a discussion of the offer. Each round is a filter, and the number who clear the second is a percentage of those who cleared the first, not of those who applied.
- The cost to company is what the employer spends, and it is larger than the salary. It includes the basic pay, allowances, the employer contribution to provident fund, any gratuity provision and insurance.
- The gross salary is the sum of the components a candidate is paid before deductions. The take home pay is what remains after the employee contributions, professional tax and income tax.
- Gratuity is paid for long service, at fifteen days of the last drawn salary for every completed year. The standard formula is fifteen days of salary times the years served, divided by twenty six working days in a month.
- A bond is recovered pro rata, so the amount owed falls in proportion to how much of the period has been served. An employee who completes the bond owes nothing.
- Notice period is counted from the date of resignation or from the date the employer accepts it, depending on the contract, and it is settled either by working it out or by paying for the unserved part.
- Provident fund is deducted from the gross and matched by the employer. It is not lost - it is savings - but it does not reach the bank account in the month it is deducted.
- Attrition is the number of leavers against the number who were there to leave, and because the strength changes through the year the denominator is usually the average of the opening and closing strength.
- Utilisation is the share of the available hours that were billed to a client. The hours that are not billed cover training, internal work and leave, so a figure of eighty per cent is not a complaint about twenty per cent of waste.
- An increment multiplies the salary rather than adding to it, so two increments of ten per cent give more than one of twenty: the second ten per cent applies to the figure the first one produced.
- A percentage of a percentage is a product, so two rounds that pass twenty five per cent each leave one applicant in sixteen, not one in four.
- The offer letter quotes the cost to company first and the take home last, so two offers can only be compared after both have been reduced to the same footing.
- The first year has a probation period, usually three or six months, during which the notice period is shorter on both sides and some benefits do not apply.
- Questions in the placement section are usually about the offer rather than the job, so the arithmetic is simple but the vocabulary has to be known: CTC, gross, net, bond, notice, PF, gratuity, appraisal.
- The written paper for these topics is short and is almost entirely application: a table of components to be totalled, a percentage to be applied twice, or a formula with three numbers in it.
How to work through these questions
- Read the question for the vocabulary before doing any arithmetic. Whether the figure quoted is the cost to company, the gross or the take home decides the whole calculation.
- In a question about the offer letter, put the components in a column and total them. Adding the employer contributions to the salary and then treating the total as the salary is the commonest error.
- For a bond, write the fraction as the period not served over the whole period. It is easy to invert, and the answer gives the mistake away: an employee who stayed longer must owe less.
- For a percentage applied twice, multiply the two rates together rather than adding them. Adding them assumes the second round was sat by everyone who applied.
- For an attrition or utilisation figure, check the denominator is the one the question asked for - the average strength and not the opening strength, the available hours and not the working days.
- Check the answer against the offer: a take home cannot be larger than the gross, a bond recovery cannot exceed the cost of the training, and a utilisation cannot exceed a hundred per cent.
Mistakes that cost marks
- Treating the cost to company as the salary and deducting tax from it, which double counts the employer contributions.
- Working out a deduction and reporting it as the take home pay, rather than subtracting it from the gross.
- Recovering a bond against the period served rather than the period not served, which makes the amount owed rise as the employee stays longer.
- Using thirty days in the denominator of the gratuity formula instead of the twenty six working days in a month.
- Adding the two percentages of a two round selection instead of applying the second one to the survivors of the first.
- Using the opening strength instead of the average strength for an attrition rate, which flatters the figure.
- Reading a utilisation figure as a measure of effort rather than of billed time, and answering with the unbilled share.
- Forgetting that an increment is a percentage of what is already being paid, so a second increment is larger in rupees than the first even at the same rate.
Worked example
A company offers a monthly gross of 30 000 rupees, from which 12 per cent is deducted for provident fund and professional tax. What is the take home pay? An employee with 5 years of service and a last drawn salary of 30 000 rupees leaves: what gratuity is due?
- For the take home, work out the deduction first: 30 000 x 12 / 100 = 3600 rupees.
- Subtract it: 30 000 - 3600 = 26 400 rupees. The check is that the answer is smaller than the gross but not by very much - a take home close to the gross is what a modest deduction gives.
- For the gratuity, the rule is fifteen days of the last drawn salary for each completed year, over twenty six working days in a month.
- Five years at 30 000 gives 15 x 30 000 x 5 = 2 250 000, and dividing by 26 gives 86 538 rupees, which is 86 538 to the nearest rupee.
- Check the size of it: five years of service at about half a month of salary a year is two and a half months of pay, and 86 538 against a monthly salary of 30 000 is just under three months. The two agree, so the formula has been applied the right way up.
Answer: Take home 26 400 rupees a month; gratuity 86 538 rupees
Practice questions with answers
A few Placement Paper Practice questions with the full solution shown, so you can see
how the method is applied before you attempt the timed set.
Question 1
An employee has served 6 years and draws a last monthly salary of 30000 rupees. Taking gratuity as fifteen days of the last drawn salary for each completed year of service, divided by 26 working days in a month, what is the gratuity, in rupees?
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A
90000
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B
207692
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C
180000
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D
103846
Answer: Option D — with explanation
Gratuity is paid at fifteen days of the last drawn salary for every completed year of service, so the fifteen days and the number of years are multiplied together and the answer is scaled by the number of working days in a month.
That is 15 x 30000 x 6 / 26 = 2700000 / 26 = 103846 rupees.
The formula is worth remembering as fifteen twenty sixths of a month's salary for each year, which is a little over half a month a year. Using thirty days in the denominator is the commonest error, and it understates the figure - the working month is taken as twenty six days, not thirty.
Common mistakes
- 90000 is not the answer: 90000
- 207692 is not the answer: 207692
- 180000 is not the answer: 180000
Question 2
An employer pays for a training course costing 100000 rupees on condition that the employee stays for 30 months, and the employee leaves after serving 3 months. If the cost is recovered in proportion to the period not served, how much has to be repaid, in rupees?
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A
100000
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B
90000
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C
10000
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D
900000
Answer: Option B — with explanation
A bond is recovered pro rata, so the amount owed is the cost multiplied by the fraction of the period that was not served.
The employee agreed to 30 months and served 3, so the unserved period is 27 months, which is 27 / 30 of the bond. The amount is 100000 x 27 / 30 = 90000 rupees.
Using the served period instead of the unserved one is the mistake the other answers are built on. It matters which way round it goes: the longer the employee stayed, the less is owed, and an employee who completes the bond owes nothing at all.
Common mistakes
- 900000 is not the answer: 900000
- 10000 is not the answer: 10000
- 100000 is not the answer: 100000
Question 3
In a year a company of 1200 employees fell to 800, with 30 resignations. What is the attrition rate for the year, as a percentage, taking it as the leavers over the average strength?
Answer: Option C — with explanation
An attrition rate counts how many people left against how many there were to leave, and because the strength changes through the year the denominator is the average of the strength at the start and at the end.
That is an average strength of (1200 + 800) / 2 = 1000, so the rate is 30 x 100 / 1000 = 3 per cent.
Using the opening strength alone flatters the figure, because the people who left are counted against more people than were actually there for the whole year. The average strength is the standard method, and a question will say so if it wants the simpler one.
Common mistakes
- 200/3 is not the answer: 200/3
- 15/4 is not the answer: 15/4
- 5/2 is not the answer: 5/2
Question 4
Of 180 available hours in a month, 90 hours are billed to clients. What utilisation is that, as a percentage?
Answer: Option B — with explanation
Utilisation is the share of the time someone was available that was actually sold to a client, so it is the billable hours over the available hours, written as a percentage.
That is 90 / 180 x 100 = 50 per cent.
The hours that are not billed are not wasted - they cover training, internal work and leave - but the figure is watched closely because it is what turns a salary into revenue. A firm that expects eighty per cent is asking for four billable days in every five.
Common mistakes
- 25 is not the answer: 25
- 200 is not the answer: 200
- 100 is not the answer: 100
Question 5
A gross monthly salary of 50000 rupees has a deduction of 20 per cent for provident fund and professional tax together. What is the monthly take home pay, in rupees?
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A
40000
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B
50000
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C
10000
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D
60000
Answer: Option A — with explanation
Take home pay is what remains of the gross after the deductions, so the deduction is worked out first and then subtracted - or, in one step, the gross is multiplied by a hundred less the rate.
The deduction is 50000 x 20 / 100 = 10000 rupees, so the take home pay is 50000 - 10000 = 40000 rupees.
The offer letter usually quotes the cost to the company rather than the gross, and the gross rather than the take home, so a candidate comparing two offers has to put them on the same footing before deciding. The employer's provident fund contribution and any gratuity provision sit between the cost to the company and the gross.
Common mistakes
- 50000 is not the answer: 50000
- 10000 is not the answer: 10000
- 60000 is not the answer: 60000
Frequently asked questions
Why is the cost to company so much larger than the salary?
Because it includes what the employer pays on top of the salary: the matching provident fund contribution, the provision for gratuity, insurance and any other benefits. The gap is typically a fifth to a third of the gross, and it is why an offer quoted as a CTC should not be compared directly with one quoted as a gross.
Do I have to repay a bond if I leave?
Only the part that corresponds to the period not served, if the bond is written that way. A bond that requires the whole amount back however long you stayed is unusual and is worth reading carefully before signing anything.
What does a utilisation target of eighty per cent mean?
That four hours in every five should be billed to a client. The remaining fifth covers training, internal meetings, administration and leave - none of it wasted, but none of it charged to a client either.
Is provident fund a deduction I lose?
No. It is deducted from your salary and paid into your own account, with the employer adding the same amount again. You do not see it in the month it is deducted, but it is your money and it earns interest.
Why is the attrition rate worked out on the average strength?
Because the strength changes during the year, and the people who left were not all there for the whole of it. The average of the opening and closing strength is the fairest denominator, and it is the standard one.
How should I compare two offers?
Reduce both to the same figure - the monthly take home is the most useful - and then compare the work, the location and the growth alongside it. A higher CTC with a lower basic pay can give a lower take home than a smaller one with a better structure.
