Call 4 19 7 22 with Sol

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1 ACCOUNTING, FINANCE & CONTROL Written Test - Call IV – 19th July 2022 QUESTION 1 - (3 POINTS) The following data are extracted from 2021 financial statements of Company MM Ltd: • Personnel costs = 8 M€ • Incidence of personnel costs on total operating costs (D&A included) = 40% • Depreciation & Amortisation = 2 M€ • Equity = 12 M€ • Total Assets = 30 M€ • Financial Expenses = 1.2 M€ • Income tax rate = 40% • Financial assets (current and non-current) = 0 • ROE = 15% • Other operating revenues = 0 • Change in inventories of final goods (and WIP) = 0 What is the value of the EBITDA Margin? A. 29.96% B. 23.66% C. 25.62% D. None of the others Solution: Total operating costs = 8/0.4 = 20 M€ EBIT = Net Profit + Income Taxes + Fin Exp – Fin Revenues +/- Changes in value of Fin Assets where: - Financial Expenses = 1.2 M€ (see text) - Financial Incomes are null (no Financial Assets) - Change in value of fin assets is null (no Financial Assets) - Net Profit = ROE * Equity = 0.15*12 = 1.8 M€ - EBT = E+ income taxes = E+0.4*EBT -> EBT = E / (1-0.4) - 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€ EBITDA = 4.2 + 2 = 6.2 M€ EBITDA Margin = 6.2 / 24.2 = 25.62% Wrong answers: A. Wrong computation of EBT Starting from Net Profit B. Wrong computation of Revenues starting from Operating Expenses (Operating Expenses not including D&A) C. Correct 2 QUESTION 2 - (3 POINTS) Still regarding Company MM, you know the following complementary information: • Average delay of payments of suppliers of raw materials and components : 90 days (end of month); • Purchases of all raw materials and components can be consi dered as evenly spread across the months; • End of year Account Payables value concerning suppliers of all raw materials…