AFC CALL II 230208 PM WithSolutions

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ACCOUNTING, FINANCE AND CONTROL MULTIPLE CHOICE TEST Call February 8th, 2023 QUESTION 1A - (3 POINTS) Koalas is a multinational company that operates in the pet food industry. The company has recently approved its 2022 annual report, with the data reported here below: • Gross Profit: 102 M€ • Other Incomes (deriving from the rent of an owned building): 11 M€ • Administrative expenses: 6.4 M€ • General expenses: 15 M€ • Depreciation & Amortization of the manufacturing equipment: 9 M€ • Sales & marketing expenses: 13 M€ • Net financial expenses: 4.3 M€ • Inventories of finished goods on December 31st, 2022: 16 M€ • Inventories of finished goods on December 31st, 2021: 24 M€ • Inventories of raw materials and components on December 31st, 2022: 10 M€ • Inventories of raw materials and components on December 31st, 2021: 6 M€ • ROCE (calculated as EBIT / (Equity + Non-current financial liabilities) ): 12.26% • Current financial liabilities: 267.5 M€. • Current tax payables: 54.8 M€ • Asset Turnover Ratio: 3 Considering the above data, which is the value of ROI ( computed using financial liabilities as the only liabilities at denominator) for Koalas in 2022? Please round up to the second decimal place for numbers and fourth decimal place for percentages (for ex: 12.26%  0.1226). A. Around 8.25% B. Around 8.65% C. Around 8.33% D. None of the other answers SOLUTION: ROI is computed as EBIT/(Total assets – Non financial Liabilities) or, alternatively, as EBIT/ (Equity+ Total Financial Liabilities). As from the data given by the text, both Numerator and Denominator are missing. To compute the numerator (EBIT): It can be computed from the data taken from Income Statement. Data suggest the adoption of an IS By FUNCTION (or DESTINATION). With the data from the text: EBIT = Gross…