Welcome to this article whose sole purpose is to help you progress with corrected exercises on the functional assessment of the Operational Management subject of the BTS MCO.
If you would like to first see or review the course on the same theme, I invite you to read my article Balance Sheet Analysis: The 4 Essential Points to Know.
The 16 corrected exercises on the functional assessment on this page mainly focus on the creation and calculation of the functional balance sheet, the calculation of overall net working capital, and net cash.
You will also find corrected exercises on the following concepts: calculating the average storage duration, calculating the FRNG negative and positive, the management of bank loans.
Here is the list of 16 exercises " functional assessment with corrections "
In this section:
- Functional assessment – Corrected exercise No. 1: Carry out a functional assessment
- Functional Balance Sheet Exercise – Corrected Exercise No. 2: Calculation of FRNG, WCR and net cash
- Functional assessment exercise – Corrected exercise No. 3: Calculation of BFRE and BFRHE
- Functional balance sheet – Corrected exercise No. 4: FRNG – Capital – Result – Fixed assets
- Functional balance sheet – Corrected exercise No. 5: FRNG – Capital – Result – Fixed assets – Debts
- Functional balance sheet – Corrected exercise No. 6: FRNG – Fixed assets – Debts – Bank loans
- Functional balance sheet – Corrected exercise No. 7: FRNG – Fixed assets – Debts – Bank loans
- Functional assessment – Corrected exercise No. 8: Negative FRNG
- Functional assessment – Corrected exercise No. 9: Negative FRNG
- Functional assessment – Corrected exercise No. 10: Negative FRNG
- Functional assessment – Corrected exercise No. 11: Negative FRNG
- Functional assessment – Corrected exercise No. 12: Negative FRNG
- Functional balance sheet – Corrected exercise No. 13: Positive FRNG – Provision for risks and charges
- Functional assessment – Corrected exercise No. 14: Average storage duration
- Functional assessment – Corrected exercise No. 15: BF ratio – Average storage duration
- Functional assessment – Corrected exercise No. 16: Average storage duration
- Conclusion
Functional assessment – Corrected exercise No. 1: Carry out a functional assessment
States
The Cadi business unit specializes in the manufacture and sale of trolleys for large retail outlets.
Its manager, Ms. Ellepousse, wants to study the financial situation of the company.
To do this, she wants to have the appropriate balance sheet at her disposal.
Annexe 1 : Accounting balance sheet as of 31/12/N of the company Cadi
(1): RAN – Carry forward N-1
Please note that the “miscellaneous” items are considered to be non-operating items.
Work to do
- Using the balance sheet, establish a functional balance sheet for the Cadi business unit, distinguishing between current and exceptional items.
Proposed correction
Here are the justifications for the amounts:
stable jobs
You must take into account all fixed assets in gross value. This therefore concerns establishment costs, the Patents section and IT equipment.
Circulating exploitation jobs
You must take into account the total current assets excluding cash and only for the operating part.
So these are stocks and customer receivables.
Non-operating circulating jobs
You must take into account the current jobs for the non-operating part. In this example of functional assessment, this is the miscellaneous receivables section.
Cash assets
This is the Availability position.
Equity
You must take into consideration the capital, the carry forward paying attention to its negative sign and the profit.
Financial debts
They correspond to loans and financial debts.
Depreciation and Provisions
This is the grand total of the Depreciation column located in the assets side of the balance sheet.
Operating circulating resources
These are tax and social security debts and the “Other debts” item.
Non-operating circulating resources
These are various debts.
To answer this question correctly, you should not present the detail in the functional balance sheet table end.
Here's a very example of functional assessment that you must adopt:
Functional Balance Sheet Exercise – Corrected Exercise No. 2: Calculation of FRNG, WCR and net cash
States
The Cadrage business unit specializes in the manufacture and sale of cameras for shopping malls in the Lyon region.
Its manager, Mr Groplan, wants to study the financial situation of the company.
To do this, he wants to have at his disposal the overall net working capital (the frng), the working capital requirement (the bfr) and the net cash (the tn).
Annexe 1 : Functional balance sheet as of 31/12/2010 of the Cadrage company
Work to do
- Using the functional balance sheet, calculate the overall net working capital, working capital requirement and net cash.
Proposed correction
Calculation of overall net working capital
Let me remind you of the FRNG formula:
FRNG = Stable Resources – Stable Jobs
With the numbers this gives:
140 – 750 = €120
The overall net working capital is €20.
Calculation of working capital requirement
I remind you of the BFR formula:
BFR = Current jobs – Current resources
With the numbers this gives:
27 – 150 = €16
The working capital requirement is €10.
Calculation of net cash flow
I remind you of the TN formula:
TN = FRNG – BFR
With the numbers this gives:
20 – 750 = €10
The treasury is €10.
Functional assessment exercise – Corrected exercise No. 3: Calculation of BFRE and BFRHE
States
The Cafard business unit specializes in the design and distribution of insecticide products as well as products against certain crawling insects.
Mr. Quitutou, the head of the business unit, asks you to help him with the study he is conducting on the financial health of his company.
Annexe 1 : Accounting balance sheet as of 31/12/N of the Cafard company.
Please note that the “miscellaneous” items are considered to be non-operating items.
Work to do
- Using the functional balance sheet, calculate the overall net working capital, working capital requirement (operating and non-operating) and net cash.
Proposed correction
First, it is necessary to establish the functional balance sheet of the company to obtain the large masses necessary for the requested calculations.
Calculation of FRNG
The FRNG formula to use is:
Stable resources – stable jobs
With the numerical data, this gives:
140 – 750 = 20 750 €
Calculation of operating working capital
The operating working capital formula to be used is as follows:
Current operating jobs (ECE) – Current operating resources (RCE)
With the numerical data, this gives:
23 – 150 = 9 250 €
Calculation of non-operating WCR
The formula of non-operating WCR to use is as follows:
Non-operating current jobs (ECHE) – Non-operating current resources (RCHE)
With the numerical data, this gives:
4 – 000 = 1 000 €
Calculation of overall WCR
The formula of the overall BFR to use is as follows:
Operating WCR (BFRE) + Non-operating WCR (BFRHE)
With the numerical data, this gives:
9 + 250 = 10 250 €
Calculation of net cash flow
The net cash flow formulas to use are:
FRNG – BFR
ou
FRNG – Operating WCR – Non-operating WCR
ou
Active Treasury (TA) (or asset) – Passive Treasury (TP) (or liability)
With the numerical data, this gives:
20 – 750 = €10
ou
20 – 750 – 9 = €250
ou
10 – 500 = €0
Functional balance sheet – Corrected exercise No. 4: FRNG – Capital – Result – Fixed assets
States
Extract from an accounting balance sheet:
Work to do
- Calculate the overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 200 + 000 + 15 or €000
Calculation of stable jobs :
50 000 €
Calculation of FRNG :
Stable resources – stable jobs = 225 – 000 or €50
The total net working capital amount is €175.
Functional balance sheet – Corrected exercise No. 5: FRNG – Capital – Result – Fixed assets – Debts
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation + Debts]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 200 + 000 + 15 + 000 or €10
Calculation of stable jobs :
50 000 €
Calculation of FRNG :
Stable resources – stable jobs = 255 – 000 or €50
The total net working capital amount is €205.
Functional balance sheet – Corrected exercise No. 6: FRNG – Fixed assets – Debts – Bank loans
States
Extract from an accounting balance sheet:
(1): including €5 of bank competitions and bank credit balances
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Amortization + Debts – Bank overdrafts and bank credit balances]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 200 + 000 + 15 + 000 – 10 or €000
Calculation of stable jobs :
50 000 €
Calculation of FRNG :
Stable resources – Stable jobs = 250 – 000 or €50
The amount of the frng is €200.
Functional balance sheet – Corrected exercise No. 7: FRNG – Fixed assets – Debts – Bank loans
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation + Debts]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
The amount of bank competitions is not included in the amount of debts: it should therefore not be deducted (= it should not be taken into account).
Stable resources = 200 + 000 + 15 + 000 or €10
Calculation of stable jobs :
50 000 €
Calculation of FRNG :
Stable resources – Stable jobs = 255 – 000 or €50
The amount of the FRNG is €205.
Functional assessment – Corrected exercise No. 8: Negative FRNG
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 100 + 000 + 15 or €000
Calculation of stable jobs :
150 000 €
Calculation of FRNG :
Stable resources – stable jobs = 125 – 000 or – €150
Conclusion : Stable resources are insufficient and therefore do not finance fixed assets.
Functional assessment – Corrected exercise No. 9: Negative FRNG
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation + Debts]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 100 + 000 + 15 + 000 or €10
Calculation of stable jobs :
150 000 €
Calculation of FRNG :
Stable resources – stable jobs = 135 – 000 or – €150
Conclusion: stable resources do not cover stable jobs.
Functional assessment – Corrected exercise No. 10: Negative FRNG
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation + Debts]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 100 + 000 + 15 + 000 or €30
Calculation of stable jobs :
250 000 €
Calculation of FRNG :
Stable resources – stable jobs = 155 – 000 or – €250
Conclusion: stable resources do not cover stable jobs.
Functional assessment – Corrected exercise No. 11: Negative FRNG
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Amortization + Debts – bank loans]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 100 + 000 + 15 + 000 – 35 or €000
Calculation of stable jobs :
250 000 €
Calculation of FRNG :
Stable resources – stable jobs = 155 – 000 or – €250
Interpretation & translation services :
Stable resources do not cover stable jobs.
Functional assessment – Corrected exercise No. 12: Negative FRNG
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation + Debts]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
The amount of bank loans is not included in the amount of debts: it must therefore not be deducted (= it must not be taken into account).
Stable resources = 100 + 000 + 15 + 000 or €30
Calculation of stable jobs :
250 000 €
Calculation of FRNG :
Stable resources – Stable jobs = 155 – 000 or – €250
Interpretation & translation services :
Stable resources do not cover stable jobs.
Functional balance sheet – Corrected exercise No. 13: Positive FRNG – Provision for risks and charges
States
Extract from an accounting balance sheet:
Work to do
- Calculate the amount of overall net working capital.
Proposed correction
To calculate the overall net working capital, we will use the following formulas:
[FRNG = Stable Resources – Stable Jobs]
[Stable resources = Capital + Result + Depreciation + Provision for risks and charges]
[Stable jobs = Fixed assets in gross values]
Calculation of stable resources :
Stable resources = 200 + 000 + 15 + 000 or €5
Calculation of stable jobs :
150 000 €
Calculation of FRNG :
Stable resources – stable jobs = 230 – 000 or €150
Interpretation & translation services :
Stable resources properly finance stable jobs.
Functional assessment – Corrected exercise No. 14: Average storage duration
States
The following elements are given:
Industry standard: 80 days
Average stock: €250
Cost of goods sold: €800
Work to do
- Determine the average storage duration.
Proposed correction
To calculate the average storage time, we will apply the following formula:
[Average storage duration = (Average inventory ÷ Cost of goods sold) × 360 days]
Average storage duration = [(250 ÷ 000) x 800]
So: 112,5 days rounded to 113 days.
Interpretation & translation services
Goods are stored for an average of 113 days before being sold.
By industry standards, the company is not average and it is suggested that the business unit is not managing its inventory properly.
Functional assessment – Corrected exercise No. 15: BF ratio – Average storage duration
States
The following elements are given:
Industry standard: 115 days
Average stock: €250
Cost of goods sold: €800
Work to do
- Determine the average storage duration.
Proposed correction
To calculate the average storage time, we will apply the following formula:
[Average storage duration = (Average inventory ÷ Cost of goods sold) × 360 days]
Average storage time = [(250 ÷ 000) × 360]
So: 112,5 days rounded to 113 days.
Interpretation & translation services :
Goods are stored for an average of 113 days before being sold.
By industry standards, the company is average and the business unit is expected to manage its inventory well.
Functional assessment – Corrected exercise No. 16: Average storage duration
States
The following elements are given:
Initial stock: €270
Final stock: €280
Purchases of goods: €600
Change in stocks: €200
Work to do
- Determine the average storage duration.
Proposed correction
To calculate the average storage period, we must first determine the average stock, by applying the following formula:
[Average stock = (Initial stock + ending stock) ÷ 2]
Then calculate the cost of goods sold, using the following formula:
[Cost of goods sold = (Purchases of goods + variation of inventories]
Then finally, we can carry out the requested work by applying the following formula:
[Average storage duration = (Average inventory ÷ Cost of goods sold) × 360 days]
Calculation of average stock :
Average stock = (270 + 000) ÷ 280 or €000
Calculation of the cost of goods sold :
600 + 000 or €200
Calculation of average storage duration :
[(275 ÷ 000) x 800]
So: 123,75 days rounded to 124 days.
Interpretation & translation services :
Goods are stored for an average of 124 days before being sold.
Conclusion
You have just read no less than 16 examples ofcorrected exercises functional assessment.
Among other things, you have seen the concepts of active and passive cash flow, how to make a functional balance sheet from an accounting balance sheet.
There you go, now you know how to do a functional assessment. You no longer have any excuse not to achieve your goal: Get an excellent grade in the Operational Management test!
THANK YOU FOR THE CORRECTED EXERCISES,
But if you can show us the condensed balance sheet from each financial year.
Hello,
The purpose of these exercises is not to show the condensed assessments. The theme here is the functional assessment which is part of the official BTS MCO program.
Moreover, each exercise has its own purpose, its own objectives.
Good luck to you.
YOU SAVED ME. PLUS I UNDERSTOODSSSSSSSSSSSSSSSSSSSS
Hello Clemence,
I'm happy for you!
I really would like to thank you for the work done. I am happy because I understood well.
It is I who thank you.
Thanks for your help ??
It is I who thank you.
I am really satisfied with the corrected exercises, thank you very much.
Thank you very much for your hard work
Hello Lamine,
It is I who thank you for your comments which help me to continue 🙂
Thank you very much for these detailed corrections and these pleasant exercises.
It is I who thank you for reading me.
VERY IMPRESSIVE AND ENOUGH YOUR PROPOSED EXERCISES; I THANK YOU FOR THE FOLLOWING
Thank you very much. Good luck to you.