Esame completo di Accounting, Finance & Control per il corso di Management Engineering presso Politecnico di Milano. Il documento tratta: ACCOUNTING, FINANCE & CONTROL MULTIPLE CHOICE TEST Call January 24th, 2025 SOLUTIONS EXERCISE 1 – 3 POINTS The following data are extracted from the 2023 financial statements of Company Alpha Ltd: • Changes in inventories of finished goods and work in progress = 0 • Depreciation &…
Esame completo di Accounting, Finance & Control per il corso di Management Engineering presso Politecnico di Milano. Il documento tratta: ACCOUNTING, FINANCE & CONTROL MULTIPLE CHOICE TEST Call January 24th, 2025 SOLUTIONS EXERCISE 1 – 3 POINTS The following data are extracted from the 2023 financial statements of Company Alpha Ltd: • Changes in inventories of finished goods and work in progress = 0 • Depreciation &…
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ACCOUNTING, FINANCE & CONTROL MULTIPLE CHOICE TEST Call January 24th, 2025 SOLUTIONS EXERCISE 1 – 3 POINTS The following data are extracted from the 2023 financial statements of Company Alpha Ltd: • Changes in inventories of finished goods and work in progress = 0 • Depreciation & Amortization = 2 M€ • Equity = 12 M€ • Financial Assets (current and non-current) = 0 • Financial income = 0 • Financial Expenses = 1.2 M€ • Income Tax Rate = 40% • Net Profit from Discontinued Operations = 0 • Other Operating Expenses = 0 • Other Operating Revenues = 0 • Personnel costs = 8 M€ • Proportion of Personnel Costs on Total Operating Costs = 40% • ROE = 15% • Total Assets = 30 M€ Considering that there are no other financial costs than the ones reported above, what is the value of the EBITDA Margin? Please round up to the second decimal place for numbers and fourth decimal place for percentages (for ex: 12.26% 0.1226). A. Around 29.96% B. Around 23.66% C. Around 25.62% D. None of the others SOLUTION Total operating costs = (Personnel costs/ Proportion of personnel costs in total operating expenses) = 8/0.4 = 20 M€ EBIT = Net Profit + Net profit from discontinued operations + Income Taxes + Fin Expenses – Fin Incomes where: • Financial Expenses = 1.2 M€ (see text) • Financial Incomes = 0 • Net Profit = ROE * Equity = 0.15*12 = 1.8 M€ • Income Taxes = [1.8 / (1-0.4)] * 0.4 = 1.2 M€ So, EBIT = 1.8 + 1.2 + 1.2 = 4.2 M€
• Expected FCFE: +8.20 M€ You also know that: • No Non-Current Assets have been sold/offset in 2024 • 2024 D&A costs related to assets acquired earlier than 2024 are the same as 2023 D&A cost • Lifetime of new Non-Current Assets: 8 years (flat depreciation, no residual value at the end of life) • For simplicity, annual revenues and purchases can be considered as evenly spread over the months (both in 2023 and 2024) • All financial revenues and financial expenses lead to a corresponding amount of cash inflows/outflows in the same year • Income tax rate is 25% (constant over the years) Based on the available information, what is the amount of new financial debts raised in 2024? Please round up to the second decimal place for numbers and fourth decimal place for percentages (for ex: 12.26% 0.1226). A. 9.30 M € B. 4.50 M € C. 4.75 M € D. None of the others SOLUTION We have to refer to the framework used to compute the 2024 FCFE EBIT -t*EBIT + D&A + NOWC (i-f): + Acc Rec (i-f) + Inv (i-f) - Acc Payab (i-f) - Net Capex FCFF + Fin Rev * (1-t) - Fin Exp * (1-t) + New Debts - Debts Repaid + New Capital - dividends and buyback FCFE The only missing value consists in the value of New Debts. All the other values can be computed using the info included in the text: - Ebit (2024) = EBIT (2023)*0.95 = 11.4 M€ - D&A = D&A (2023) + New D&A = 5 + 8/8 = 6 M€
Company EBIT D/E Net Competitive # Nominal Market Net Cash (€) Profit Advantage Shares Value of Price Financial Flow from Shares (€/share) Debt Operating (€/share) (€) Activities (€) Beta 100,000 2.0 60,000 Reputation 10,000 1,400,000 A 10,000 0.8 30,000 Productivity 50,000 0.17 8.50 5,000 700,000 B -80,000 1.7 48,000 Image 30,000 0.21 10.00 9,000 1,000,000 C -90,000 1.8 50,000 Reputation 45,000 0.19 9.70 9,500 1,250,000 Company Revenues EBIT D/E Competitive Net D&A # Nominal Market (€) (€) Advantage Financial (€) Shares Value of Price Debt Shares (€/share) (€) (€/share) Gamma 15,000 8,000 2.5 Cost 20,000 1,000 leadership D 13,000 8,000 2.3 Plant 15,000 1,100 40,000 0.75 1.25 saturation E 10,000 5,500 1.6 Brand 12,000 500 25,000 0.80 1.60 F 17,000 8,800 2.2 Economy of 18,000 1,200 13,000 2.90 4.00 scale In the above tables, Net Financial Debt is computed as (Short-term debts + Long-term debts – Cash). Based on the available data, what is the EV of Alpha? Please round all calculations to the second digit. A. EV is about 66,412 € B. EV is about 523,030 € C. EV is about 492,070 € D. None of the others SOLUTION EV of Beta: B and C are comparable to Beta in terms of D/E, net profit, competitive advantage, Net Financial Debt, and Cash Flow from Operating Activities. Instead, A is not comparable to Beta as its D/E, net profit, competitive advantage, Net Financial Debt, and Cash Flow from Operating Activities are quite different from those of Beta. Market capitalization can be calculated considering #shares * market value of shares.
SOLUTION • A is not correct since the operational budget follows an accrual logic, while the financial budget is based on the cash principle. • B is false because the budgeting can also be used to set targets and incentives to employees. • C is correct because the master budget consists of a series of interconnected. budgets, and capital expenditures budget and revenue budget are part of the master budget • D is incorrect because there is a correct answer. EXERCISE 6 - 2 POINTS Which of the following statements about organizational reporting is CORRECT? A. Indicators at all levels should always prioritize financial metrics over non-financial ones. B. Cost centers are responsible for generating revenues and controlling costs. C. Indicators for top management primarily focus on detailed operational metrics. D. None of the others SOLUTION • A is wrong since effective reporting includes both financial and non-financial metrics tailored to the audience's needs. • B is wrong since cost centers are responsible for costs only, and not for revenues. • C is wrong since indicators for top management, on average, prioritize high levels and strategic measures • D is correct
EXERCISE 9 - 2 POINTS Which of the following statements concerning sustainability reporting is CORRECT? A. Accounting-based indicators are the most used measure to report sustainability impacts. B. Sustainable Development Goals (SDDs) represent the main reference as a reporting framework for preparing sustainability reports for European large and listed companies C. Double materiality perspective requires companies to identify their impact on planet and people but also understand how the external environment may affect their business. D. None of the other answers SOLUTION: • A is wrong because the main instruments for sustainability reporting are value drivers and non-financial indicators. • B is wrong because, even though SDG reporting is growing in relevance, it is not the main reference model for sustainability reporting. Indeed, a different range of reporting standards is used by companies making comparisons challenging. • C is correct. • D is wrong.
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