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AFC 2018 MULTIPLE CHOICE TEST (individual assignment) Call 26th June 2019 1. Company A constructs and trades mechanical equipment. Data in Table are extracted from the Income Statement (by Function) of the Company (published in March 2019 and related to the fiscal year 2018). COMPANY A (2018) Revenues [k€] 25,000 Other Operating Income [k€] 1,000 Financial Income [k€] 30 Financial Interests [k€] 90 Cost of Sales [k€] 12,000 R&D Expenses [k€] 1,500 Marketing Expenses [k€] 2,000 On top of this, you know that Company A signed in January 2018 a 2 years contract with Company B, for Sales Distribution services. The cost amounts to 700 k€ for 2018 and they will be paid ex-post by the end of June 2019. On the base of the AVAILABLE data, it is TRUE that: (4 Points) A. Gross Profit = 13,000 k€; EBIT = 10,500 k€ B. Gross Profit = 13,000 k€; EBIT = 9,800 k€ C. Gross Profit = 14,000; EBIT = 9,740 k€ D. Gross Profit = 12,300; EBIT = 10,440 k€ Solution (data in k€) Revenues 25,000 - Cost of Sales 12,000 GROSS PROFIT 13,000 - R&D Expenses 1,500 - Marketing Expenses 2,000 - Distribution Services 700 Other Operating Income 1,000 EBIT 9,800 2. You are trying to calculate the value of ROE of a Company Alpha for 2018, a company operating in the renewables industry, but you do not have access to the financial statements. You were able to gather just the following information:  Total Assets = 150 mln €  Total (Current and Non-Current) Liabilities = 70 mln €  Asset Turnover Ratio (AT) = 2  Corporate tax rate = 40%  ROS (or “EBIT margin”) = 10%  Financial Incomes = 2 mln €  Financial Expenses = 7 mln € On the basis of these data, it is TRUE that: (4 Points) A. ROE (2018) = 18.75% B. ROE (2018) = 12.5% C. ROE (2018) = 7.5% D. None of the previous answers is true Solution: Equity = 150…