5th call written text with solutions

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ACCOUNTING, FINANCE AND CONTROL MULTIPLE CHOICE TEST Call September 5th, 2023 QUESTION 1A – (3 POINTS) You have available the following data about the Sunshine Fashion company, an Italian fashion brand specialized in the production and commercialization of clothes and accessories for women. You have the following data, taken from the 2022 annual report: • Cost of Goods Sold = 60,000 k€ • EBT = 15,000 k€ • Financial expenses = 5,000 k€ • Financial revenues = 4,000 k€ • Inventories of raw materials (01/01/2022) = 1,200 k€ • Inventories of raw materials (31/12/2022) = 1,800 k€ • Net profit = 10,000 k€ • Other operating income = 2,500 k€ • Selling, Marketing, Administrative, and General Expenses = 10,000 k€ • Trade receivables (01/01/2012) = 5,000 k€ • Trade receivables (31/12/2022) = 30,000 k€ Knowing that there are no other financial expenses and financial incomes other than those reported above, based on the information available, what is the EBIT MARGIN of the company in the year 2022? A. Around 21.77% B. Around 17.18% C. Around 19.16% D. None of the other answers SOLUTION Answer C is correct. To compute the EBIT Margin, the Revenues and the EBIT are needed. EBIT is computed from the inversed formula of EBT. EBT = EBIT – Net Financial Expenses  EBIT = EBT + Net financial expenses Net financial expenses = financial expenses - financial revenues = 5,000 – 4,000 = 1,000 k€ EBIT = EBT + Net financial expenses = 15,000 € + 1,000 € = 16,000 k€ To compute Revenues, the format of the Income Statement by Destination/Function must be used. With the inversed formula, Revenues are equal to: EBIT = Revenues – COGS – period costs + other operating income  Revenues = EBIT + COGS + period costs – other operating income = 16,000 + 60,000 + 10,000 – 2,500 = 83,500 k€ Therefore, the…