4. Application exercise, module 4
Module 4 : Practical Example
We will use the same data as in exercise 3 (previous module):
Income statement (P&L)
Cash-flow Statement
We add the opening balance sheet (beginning of the period).
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Question 1 of 5
1. Question
To build the balance sheet end-of-period, you must calculate
Tangible fixed assets, net
CorrectIncorrectHint
The tangible fixed assets are increased by capital expenditures and decreased by the depreciation of the year
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Question 2 of 5
2. Question
To build the balance sheet end-of-period, you must calculate the capital employed year-end
CorrectIncorrectHint
Capital employed represents the total funds invested in the business operations, i.e. non-current (or fixed) assets (tangible and financial, in the exercise) and working capital requirement (which increased as a consequence of sales growth).
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Question 3 of 5
3. Question
To build the balance sheet end-of-period, you must calculate the shareholders’ equity.
CorrectIncorrectHint
Equity represents the investment accumulated by shareholders throughout the years, investing their cash to buy shares issued by the firm and/or reinvesting all or part of the net earnings generated during the period (retained earnings) ; both factors are relevant in the exercise.
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Question 4 of 5
4. Question
To build the balance sheet end-of-period, you must calculate the net financial debt.
CorrectIncorrectHint
The firm negotiated additional bank debt; net means net of cash
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Question 5 of 5
5. Question
To build the balance sheet end-of-period, you must calculate the net financial resources.
CorrectIncorrectHint
It’s the sum of shareholders’ equity and net financial debt, and should balance with capital employed!