Call 2 14 02 22 with Sol

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ACCOUNTING, FINANCE & CONTROL Written Test - Call II – 14th February 2022 QUESTION 1 - (3 POINTS) A financial analyst is evaluating, from the outside, the performance of Company X. The following data are available about the year 2021: ● ROA = 5% ● Net financial costs (financial expenses – financial income) = 8.8 Mln € ● Third-party liabilities/Equity = 2 ● r = 0.012 (calculated considering Third-party liabilities) ● s = 0.7 Based on the available data, which answer is CORRECT? A. EBT is around 55 Mln € B. ROE is around 12.6% C. Net income is around 32.3 Mln€ D. Effective tax rate is around 42.9% Solution: Third-Party Liabilities = Net financial Expense / r = 733.33 Mln € Total Assets = Third Part Liabilities *3/2 = 1,100 Mln € ROA = EBIT/ Tot Assets = 5% EBIT = 5% *1,100 = 55 Mln ROE (leverage formula) = s*(ROA+TPL/E*(ROA-r)) = 8.82% E = Tot Assets / 3= 366.67 Mln € Net Income = ROE*E= 32.34 Mln € EBT = EBIT - NET FINANCIAL COSTS = 55 - 8.8 = 46.2 Mln€ Effective tax rate = Taxes / EBT = (46.2-32.34)/46.2 = 30% A. is wrong because it does not consider the Net financial expenses (EBT = 55 Mln€ instead of EBT = 46.2 Mln€) B. is wrong due to a mistake in the leverage formula, computed as ROE = (ROA + TPL/E*(ROA - r)) instead of ROE = (ROA + TPL/E*(ROA - r))*s C. is correct D. is wrong due to a mistake in the computation of Effective tax rate that is calculated as Taxes / Net income QUESTION 2 - (3 POINTS) With reference to Company X (question 1), additional information is available: ● EBIT margin (2021) = 10% ● Revenues (2020) = Revenues (2021) ● DSO decreased from 12 (2020) to 10 (2021) ● Inventory Turnover Ratio decreased from 4 (2020) to 3.75 (2021) ● ΔNOWC (final - initial) = + 7,500 k€ ● VAT: 0% in 2020 and 2021 How much is the Δ Trade Payables (final-initial) between…