Microsoft Word - Final exam statement (Classique)
Finance MGE 2 -2- Final Exam
PART 1 (10 MARKS)
SHORT EXERCICES
Exercise 1. (1 point)
A firm has a net income of 200, an increase in accounts receivables of 30, depreciation of 55
and a decrease in accounts payable of 25. Compute the operating cash flow.
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Exercise 2. (2 points)
Besson Limited, a manufacturing company, had the following income statement information:
XXXXXXXXXX XXXXXXXXXX
Revenue (net sales) € 5,000,000 4,800,000
Cost of goods sold € 3,000,000 2,800,000
Other operating expenses € 500, XXXXXXXXXX,000
Interest expense € 100, XXXXXXXXXX,000
Tax expense € 120, XXXXXXXXXX,000
Calculate the Besson’s gross profit margin and the Besson’s net profit margin both in the years
2016 and 2017. Briefly describe the evolution of these margins over the period 2016 to 2017.
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Finance MGE 2 -3- Final Exam
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Exercise 3. (2 points)
A financial analyst gathers the following information about two companies for the year ending
31 December 2017:
Company A Company B
Dividend yield 37.5% 40.0%
Return on Capital Employed 12% 10.0%
Financial leverage XXXXXXXXXX
a) Which of the above ratios best describe the companies’ profitability ?
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) Which information is missing to compute the Return on Equity ?
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Finance MGE 2 -4- Final Exam
Exercise 4 (5 points)
Compagnie des Alpes is a French company created in 1989 that operates many ski resorts and
waterparks (Walibi) in Europe. Investment spending has increased in 2017 in an effort to renew
and extend concession contracts, secure snow and improve customer satisfaction.
Working capital for Compagnie des Alpes over the last 3 years (at 31 December) was as
follows:
The income statement includes the following data:
NB: VAT rate is 20% and applies throughout the period XXXXXXXXXX.
Question 1. (3 points) Calculate the three commonly used turnover ratios for working capital
(using an annual base of 360 days)
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In € million XXXXXXXXXX
Inventory 29,4 28,8 30,5
Receivables 81,2 106,0 112,8
Payables 6,1 7,3 9,2
In € million XXXXXXXXXX
Revenues - net sale
(excl. VAT)
XXXXXXXXXX
Purchases (excl. VAT XXXXXXXXXX
Finance MGE 2 -5- Final Exam
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Question 2. (2 points) Comment the evolutions of these ratios in relation to the growth of sales
experienced by Compagnie des Alpes.
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Finance MGE 2 -6- Final Exam
PART XXXXXXXXXXPOINTS)
SwissAir is a low cost airline ca
ier that provides cheap ‘no-frills’ flights to a wide range
of European destinations.
Some of the key business highlights were as follows:
- 45 new routes and 6 new destinations were launched, expanding the network to 110 routes
and 30 airports in 11 countries.
- The fleet grew to 72 aircraft with an average of 5.2 years in 2016, making it one of the most
modern and environmentally friendly fleets in Europe.
- The number of ticket sold rose by 11.5 per cent to 33,055,102 tickets in XXXXXXXXXX,407,135 in
2015).
- The average ticket price (excluded taxes paid to airports) increased by 5.9 per cent in 2016
for an amount of £49 per seat, driven by strong summer trading. This average ticket price
includes extra passenger revenues (sales of drinks and perfumes) and is £0.90 per seat both
in 2015 and in 2016.
- Operating fixed costs (excluding fuel) fell by 1 per cent per seat from £28.78 to £28.49.
- Variable fuel costs increased by 33 per cent to £1.48 per seat in 2016.
- Earnings before tax (EBT) of £89 million is up 45% from £61 million in 2015.
- The company is subjected to income tax rate of 20% for the years 2015 and 2016
The table below shows some important financial information for Swiss Air that is extracted
from the income statement and balance sheet.
£m XXXXXXXXXX
Revenues XXXXXXXXXX314.40
EBIT* XXXXXXXXXX
Capital employed** XXXXXXXXXX.30
Net assets XXXXXXXXXX
Cu
ent assets XXXXXXXXXX
Cu
ent liabilities XXXXXXXXXX
Shareholder’s Equity XXXXXXXXXX
Net (financial) Debt XXXXXXXXXX
* Earnings before interest (financial expenses) and tax.
** Long-term capital employed (equity + non-cu
ent liabilities)
Finance MGE 2 -7- Final Exam
Question 1. (2 points) A financial analyst of Me
ill Lynch finds that the financial leverage for
Swiss Air is 39.7% in 2015. Calculate the financial leverage ratio for the year 2016 using the
above key financial highlights and
iefly comment its evolution.
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Question 2. (1,5 point) State two possible methods that you could implement to assess the
profitability of Swiss Air from the perspective of shareholders. Explain how you can use them
adequately in order to interpret the evolution of Swiss Air’s profitability.
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Finance MGE 2 -8- Final Exam
Question 3. (2 points) Compute the Operating and Financial Breakeven point for the years 2015
and 2016. Comment the evolution of the obtained figures.
Finance MGE 2 -9- Final Exam
Question 4. (1,5 point) Calculate the following financial ratios for the year 2016 :
a) Net profit margin
) Cu
ent ratio
c) Return on capital employed (ROCE)
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Finance MGE XXXXXXXXXXFinal Exam
Question 5. (3 points) The financial analyst of Me
ill Lynch also provides you the following
atios that he calculated for the year 2015 for Swiss Air :
- Net profit margin = 3.7 per cent - Cu
ent ratio = XXXXXXXXXXReturn on equity (ROE) = 6.5 per cent
On the basis of these information and the ratios that you have obtained in Question 4, answer
the two following questions :
a) To what extent do the results found for the period XXXXXXXXXXsupport the view that
“Swiss Air has committed to grow from strength to strength” ?
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) Which information that are not yet provided would be relevant to assess the financial
isks borne by Swiss Air and its solvency?
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