AFC CALL I 2023 with solutions

Page 1

ACCOUNTING, FINANCE AND CONTROL (Prof. P. Maccarrone) Firt call written test (January 18th, 2023) EXERCISE 1 – PART A – (4 points) Alpha Ltd is a start -up founded on January 1 st, 2022, which assembles and sells artificial intelligence -based companions for elderly people. You are a financial analyst interested to evaluate the profitability of this start- up. You have the following data available from 2022 financial statements (data are in thous ands of Euros, K€). Alpha drafts the Income Statement by nature. • Personnel cost = 50 • D&A = 13 • Equity = 129 • Financial incomes = 1 • Other operating costs = 15 • Other revenues = 10 • Revenues = 130 • Total Assets = 325 • Variation of finished goods inventory (final – initial) = + 8 • Variation of raw materials inventory (final – initial) = + 5 You also know that: • DSO = 3 months (months are used for the computation of the ratio rather than days); • DPO = 6 months (months are used for the computation of the ratio rather than days; trade payables are related to the purchases of raw materials only; there are no other purchases of operating goods); • ICR = 6.25; • Final Net Operating Working Capital = + 33,000 Based on the available data and knowing that trade payables are the only non-financial liabilities, what is the value of ROI (computed using Financial Liabilities) of Alpha Ltd for 2022? A. About 16% B. About 15% C. About 13% D. None of the other answers SOLUTION The question requires drafting the Income Statement of Alpha L td for 2022. As reported in the text, the IS needs to be prepared by nature and it will result as follows: Revenues +130 Other revenues +10 Inventory variation of finished goods (f - i) +8 Purchase of raw materials Missing Inventory variation of raw materials (f - i) +5 Personnel costs -50 Other…