Call V 01 09 21 with Sol

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1 ACCOUNTING, FINANCE & CONTROL _ Arena Written Test - Call V – 1st September 2021 QUESTION 1 – (3 POINTS) The following data as of December 31st, 2020, refer to Foody Ltd, a company that produces and sells bakery and meal solutions (k€ = thousands €): • Number of shares: 112,000 k • Nominal value of shares: 1 €/share • Market price of shares: 2 €/share • Reserves: 800,000 k€ • Total Equity: 1,272,000 k€ • Income taxes: 60,000 k€ • Taxes paid: 80,000 k€ • Revenues: 3,850,000 k€ • Other income: 10,000 k€ • Cost of Goods Sold (COGS): 2,620,000 k€ • Selling and marketing expenses: 300,000 k€ • Administrative expenses: 350,000 k€ A portion of raw materials used for production activities in December 2020, that amounts to 100,000 k€, will be paid in January 2021. You also know that at the beginning of the year, the number of shares outstanding was 100,000 k. Data about financial income and financial interests are not reported, but they are NOT NULL. Given the available data, which of the following statements is CORRECT: A. Tax rate around 14%; Gross Profit = 1,230,000 k€ B. Tax rate around 14%; Gross Profit = 1,130,000 k€ C. Tax rate around 19%; Financial income – financial interests = 282,000 k€ D. Tax rate around 18%; Financial income – financial interests = 150,000 k€ SOLUTION Net profit of the year = Equity - Reserves – Share capital = 1,272,000 k€ - 800,000 k€ - 112,000 k€ = 360,000 k€ EBT = Income taxes + net profit = 60,000 k€ + 360,000 k€ = 420,000 k€ Tax rate = 60,000 k€ / 420,000 k€ = 14% Revenues - Cost of Goods Sold = Gross profit = 3,850,000 k€ - 2,620,000 k€ = 1,230,000 k€ A. Correct B. Wrong the calculation of the gross profit: the 100,000 paid in 2021 are deducted from cost of sales. C. Tax rate calculated over EBIT; Gross profit includes other income. D. A…