Esame completo di Accounting, Finance & Control per il corso di Management Engineering presso Politecnico di Milano. Il documento tratta: AFC 2018 MULTIPLE CHOICE TEST (individual assignment) Call 17th Jan. 2019 1. Company A produces and sells wood panels. In the Table below, you can find 2018 data of Company A. Please, calculate the OPERATING PROFIT of Company A in 2018. COMPANY A - DATA (2018) Number of Panels…
Esame completo di Accounting, Finance & Control per il corso di Management Engineering presso Politecnico di Milano. Il documento tratta: AFC 2018 MULTIPLE CHOICE TEST (individual assignment) Call 17th Jan. 2019 1. Company A produces and sells wood panels. In the Table below, you can find 2018 data of Company A. Please, calculate the OPERATING PROFIT of Company A in 2018. COMPANY A - DATA (2018) Number of Panels…
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AFC 2018 MULTIPLE CHOICE TEST (individual assignment) Call 17th Jan. 2019 1. Company A produces and sells wood panels. In the Table below, you can find 2018 data of Company A. Please, calculate the OPERATING PROFIT of Company A in 2018. COMPANY A - DATA (2018) Number of Panels Sold [#] 8,000,000 Of Whom paid by customers in 2019 [#] 800,000 Price [€/panel] 25.00 Trade Receivables (final) [€] 20,000,000 Income generated from the rent of proprietary buildings [€] 10,000,000 Changes in Inventories of Finished Goods and WIP (f-i) [€] 5,000,000 Direct Raw Materials [€/panel] 12.50 Trade Payables (final) [€] 50,000,000 Depreciation & Amortization [€] 25,000,000 Cost of Personnel [€] 30,000,000 Other Operating Expenses [€] 20,000,000 Financial Income [€] 100,000 Financial Interests [€] 900,000 OPERATING PROFIT: A. 40 mln€ B. 70 mln€ C. 39.2 mln€ D. 65 mln€ Solution [mln€] Revenues: 200 + Other Operating Income: 10 Total Revenues: 210 + Changes in Inventories of Finished Goods [€]*: 5 - Raw Materials used: 100 - Employee Benefit Expenses [€]: 30 - Depreciation & Amortization [€]: 25 - Other Operatng Expenses [€]: 20 OPERATING PROFIT: 40 *As of the given data: quantity produced in 2018 = quantity sold in 2018. Changes in inventory is thus due to a change in the unitary value of the stock of finished goods.
2. The Residual Income (RI): A. Is a ratio indicator and, as ROI, it tends to favour growth B. Is an absolute indicator and, as ROI, it tends to favour growth C. Is an absolute indicator: differently from ROI, it tends to favour growth D. Is an absolute indicator, while ROI is a ratio indicator: they both equally tend to favour growth 3. Not available: topic treated differently this year 4. Consider the following data about company ABC Ltd: All data are in [k€] 2018 (actual) 2019 (budgeted) Depreciation and Amortization 100 200 Account Receivables 75 100 Account Payables 100 50 Inventories 25 100 Repayment of Debt - 1,300 Properties, Plants and Equipment 1,000 2,000 EBIT 2,500 3,000 Financial Expenses 200 200 Taxes 720 840 Which is the budgeted Free Cash Flow to Firm for 2019? A. 950 k€ B. 1,150 k€ C. 1,010 k€ D. None of the above Solution [k€] EBIT: 3.000 - Financial Expenses: 200 EBT: 2.800 Corporate Tax Rate = Taxes / EBT = 840/ 2,800 = 30% Taxes (EBIT) = 3,000 * 0.3 = 900 k€ [K€] EBIT: 3,000 + Depreciation and Amortization: 200 - Delta Net working capital: 150 - Delta CapEx: 1,200 - Taxes (EBIT): 900 FCFF: 950
5. As a result of its financial planning, a company estimates negative FCFE but positive FCFF for the next year. Which of the following ideas turns not to increase the FCFE for that specific year? A. Enter in a leasing contract instead of buying in February a new machine (terms of payment: 2 months) as planned B. Ask for factoring C. Ask for a loan and invest the whole sum buying government bonds D. Ask for a new line of credit 6. Game Inc, a corporation in the gambling industry, needs to raise capital to continue its operations. Game Inc had previously an Equity of 460,000 €, recently they issued and sold 3,000 shares of stock at €80 each. They supported the raise of capital also with bonds, redefining the overall cost of debt of the company, which is now 6%. All their liabilities are illustrated in the snapshot of the Balance Sheet below: Current Liabilities Accounts payable 20,000 Credit line 20,000 Short term loans 30,000 Deferred Taxes 20,000 Payroll liabilities 15,000 Non-Current Liabilities Long term business loan 150,000 Bonds payable 100,000 Total Liabilities 355,000 It is expected that the launched stock has a higher volatility than the market, which carries a return (rm) of 6%. The estimated beta leverage is equal to 1.3, the risk-free rate of the market is 0.2%. Given the risk profile, Game Inc takes care of not diminishing the Interest coverage ratio, which is now of 3.2. If the cost of equity of Game Inc. is calculated using the CAPM and the corporate tax rate is equal to 30%, what is its weighted average cost of capital? A. 5,88% B. 6,68% C. 6,52% D. 6,85% Solution Equity: 3,000*80 +460,000 = 700,000€ Financial Debt: 20,000 + 30,000+100,000+150,000= 300,000€ Ke= rf+Bl(rm-rf) -> ke= 0.2%+1.3*(6%-0.2%) WACC = E/(E*D)*ke + D/(E*D)*kd*(1-tc) -> WACC = 7,7% *…
7. Which of the statements about Balanced Scorecard is FALSE: A. The Balanced Scorecard encourages managers to consider a portfolio of both financial and value drivers’ measures B. Balanced Scorecard measures are linked to the organisation’s strategic objectives C. The generic Balanced Scorecard contains four quadrants: Financial; Customer; Internal Business Processes; Learning and Growth D. The balanced scorecard is drafted with the same periodicity of financial statements 8. You have to estimate the Enterprise value of a social network. Which of the following parameters cannot be considered as reference in your relative valuation? A. Sales B. EBIT C. Net earnings D. Number of users 9. Which ones of the following responsibility centres are cost centres? A. The Operations and the Research & Development organizational functions B. The Human Resources and the Marketing organizational functions C. The Sales and the Procurement organizational functions D. The Operations and the Logistics organizational functions 10. Business Unit C of Fly-out Company Ltd. needs to purchase sensors, either from the Business Unit B or from an external supplier. A reliable supplier might provide the required 1,000 units for 75.00 €/unit. Business Unit B production capacity is up to 10,000 units and the flexibility of their workforce allows them to scale-up or down as needed. The breakdown of its cost structure is as follow: Direct materials €/u 10.00 Direct labour €/u 15.00 Variable overhead €/u 20.00 Fixed overhead €/u 25.00 Total €/u 70.00 Business Unit B is currently selling 7,000 units to an external costumer. If Fly-out handles a transfer price policy of marginal cost and a mark-up of 20% would the internal transaction take place? A. No, it will not. B will only sell at 84 €/unit, while…
Solution Max = price of the external supplier = 75 €/unit Min = price of the marginal costs = 10 €/u + 15 €/u + 25 €/u = 45 €/u TP = 120% * marginal costs = 120% * 45 €/u = 54 €/u
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