AFC 2025 written test 1st round text and solutions

Page 1

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€ Revenues = 20 + 4.2 = 24.2 M€ (D&A is not added in the computation since it is already counted within the Total Operating Expenses) EBITDA = 4.2 + 2 = 6.2 M€ EBITDA Margin = 6.2 / 24.2 = 25.62% EXERCISE 2 - 3 POINTS You have the following financial data for the company Gamma, as of December 31st, 2023: • Accrued Financial Income: 1,000 M€ • Cashed Financial Income: 5,000 M€ •…