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30060 Management Mid term exam (example)

FIRST TURN (EXAMPLE).

Use two separate sheets for parts A and B. You have 90 minutes to complete the exam.

The final grade of the mid-term exam will be the weighted average of the two parts: the first part will
count for 60%, the second part for 40%. A minimum of 12 in each part is required in order to pass the
exam.

A. Essay questions [Max 31 points]:

1. What are functional areas and business areas? What are their implications for management? [9 points].

2. The institutional structure: What is it and how does it influence the long term prosperity of business
firms? Please exemplify [9 points].

3. The economic sustainability of organizations: what is it and how do we assess it in business firms [9
points]?

4. Illustrate the economic activities of the Museum of Science and Technology “Leonardo Da Vinci” and
discuss differences and similarities with business firms [4 points].

B. Financial statement analysis [Max 31 points]

The financial statements (balance sheet + income statement) of company Alpha for the year 2005 include the
following items:

Cash 20,000
Accounts payable 190,000
Equipment 660,000
Purchase of materials 710,000
Accounts receivable 280,000
Patents 20,000
Interest 140,000
Issued common stocks 180,000
Sales revenues 1,200,000
Inventory 80,000
Long term loans 580,000
Tax 0
Depreciation 50,000
Administration overheads 50,000
Revenue reserves 30,000
Short term debt 60,000
Labor 170,000
Investments 10,000
Sales and marketing expenses 100,000
Current portion of long term debt 30,000

1) Reconstruct the two documents; indicate the basic sections of the balance sheet, and calculate profits
at various stages of distribution and appropriation [16 points].

2) Calculate and discuss profitability, financial strength and liquidity ratio [12 points]. Assess the
overall financial performance and propose actions to improve it [3 points]