In this section:
Application: Green Wave Technologies
States :
Green Wave Technologies specializes in manufacturing environmentally friendly electronic devices. It is planning a significant expansion next year and wants to understand its self-financing capacity to finance its new projects. This year's financial year generated a turnover of €2, with a net profit of €500. The company depreciated its equipment for €000 and suffered an asset depreciation of €400. Green Wave Technologies operates with a tax rate of 000%.
Work to do :
- Calculate corporate tax from net income.
- Determine the net income before tax.
- Calculate the total depreciation and amortization provisions.
- Determine the self-financing capacity (SFC).
- Discuss the importance of cash flow for the company's expansion project.
Proposed correction:
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To calculate corporate tax, we use the formula:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.Corporate tax = 400 ÷ (000 – 1) x 0,25 = €0,25.
The corporate tax is €133.
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Net profit before tax is calculated as follows:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 400 + 000 = €133.
Green Wave Technologies' net profit before tax is €533.
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Total depreciation and amortization provisions are the sum of depreciation and amortization:
Total allocations = Depreciation + Depreciation.
Total allocations = 150 + 000 = 50 €.
The total allocations for the year are €200.
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The Self-Financing Capacity (SFC) is calculated as follows:
CAF = Net result + Total allocations.
CIF = 400 + 000 = €200.
Green Wave Technologies' self-financing capacity is €600, which represents the company's internal resources to finance its investments.
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The cash flow is crucial for expansion because it allows the company to finance its new projects without resorting to external financing. For Green Wave Technologies, a capacity of €600 means an increased possibility of seizing growth opportunities.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciation + Amortization |
| Self-financing capacity | Net result + Total allocations |
Application: Vintage Fashion
States :
Vintage Mode, a fashion store focused on the resale of vintage clothing, is enjoying increasing popularity. With an annual turnover of €800, the store recorded a net profit of €000. Depreciation and amortization of unsold inventory amount to €120. They are wondering about the gross self-financing margin to plan the opening of a second store. The tax rate is 000%.
Work to do :
- Calculate the amount of corporate tax.
- Calculate the net income before tax.
- Calculate the total depreciation and amortization expenses for Vintage Mode.
- Calculate the self-financing capacity.
- Analyze the potential effect of this self-financing on the project to open the second store.
Proposed correction:
-
To calculate corporate tax:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 120 ÷ (000 – 1) x 0,20 = €0,20.
The corporate tax payable is €30.
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The net result before tax is:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 120 + 000 = €30.
Vintage Mode's net profit before tax is €150.
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The depreciation and amortization provisions are:
Total allocations = Depreciation + Depreciation.
Total allocations = €35.
The total prize money amounts to €35.
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The self-financing capacity is calculated as:
CAF = Net result + Total allocations.
CIF = 120 + 000 = €35.
The self-financing capacity is €155, providing solid financial support for future developments.
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Vintage Mode's self-financing capacity of €155 constitutes a valuable reserve for the opening of its second store, reducing dependence on bank financing.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciation + Amortization |
| Self-financing capacity | Net result + Total allocations |
Application: BioEssence Cosmetics
States :
BioEssence Cosmetics, an innovative company in the organic cosmetics sector, is looking to improve its production techniques. For this year, the company generated a turnover of €1 and a net profit of €200. Depreciation and impairment losses on crushed products total €000. The company has a tax rate of 220%.
Work to do :
- Determine the amount of corporate tax that BioEssence Cosmetics must pay.
- Calculate the net income before tax for the company.
- Identify the total amount of depreciation and amortization of crushed products.
- Determine the self-financing capacity of BioEssence Cosmetics.
- Explain why cash flow is crucial for improving production techniques.
Proposed correction:
-
Corporate tax is calculated as follows:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 220 ÷ (000 – 1) x 0,28 = €0,28.
BioEssence Cosmetics must pay a tax of €85.
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Net profit before tax is calculated as follows:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 220 + 000 = €85.
The net profit before tax of BioEssence Cosmetics is €305.
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The depreciation and impairment charges total:
Total allocations = Depreciation + Depreciation.
Total allocations = €45.
The total prize money is €45.
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The self-financing capacity is calculated by:
CAF = Net result + Total allocations.
CIF = 220 + 000 = €45.
BioEssence Cosmetics' self-financing capacity is €265.
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The gross self-financing margin of €265 can be invested primarily in improving production techniques, ensuring the competitiveness of the company.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciation + Amortization |
| Self-financing capacity | Net result + Total allocations |
Application: EcoFood Delivery
States :
EcoFood Delivery, an innovative startup in the delivery of balanced meals, is considering diversifying its offerings with new vegan recipes. With a turnover of €650, the company achieved a net profit of €000. Depreciation of delivery vehicles and depreciation of equipment total €90. The applicable tax rate is 000%.
Work to do :
- Calculate the amount of mandatory corporate tax for EcoFood Delivery.
- Find the company's net income before tax.
- Add up the depreciation and amortization provisions.
- Calculate the self-financing capacity.
- Consider how this capability can support diversification of offerings.
Proposed correction:
-
For corporate tax:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 90 ÷ (000 – 1) x 0,22 = €0,22.
EcoFood Delivery must pay €25 in taxes.
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Net income before tax is defined as follows:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 90 + 000 = €25.
The net result before tax amounts to €115.
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The total allocations are:
Total allocations = Depreciation + Depreciation.
Total allocations = €25.
The total prize money is €25.
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The self-financing capacity is calculated here:
CAF = Net result + Total allocations.
CIF = 90 + 000 = €25.
EcoFood Delivery has a self-financing capacity of €115.
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This self-financing capacity is essential to the diversification of their offers, allowing them to invest in new products without burdening their budget with loans.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciation + Amortization |
| Self-financing capacity | Net result + Total allocations |
Application: Watercolor Decor
States :
Aquarelle Décor, a small business specializing in the sale of artistic murals, is considering expanding its premises. The company has a turnover of €300 and a net profit of €000. Depreciation and amortization provisions total €40. The tax rate is 000%.
Work to do :
- Evaluate corporate tax for Aquarelle Décor.
- Calculate the net income before tax.
- Calculate the total depreciation and amortization provisions.
- Calculate the company's self-financing capacity.
- Discuss the value of this capacity for the planned expansion of the premises.
Proposed correction:
-
To calculate corporate tax at Aquarelle Décor:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 40 ÷ (000 – 1) x 0,15 = €0,15.
The corporate tax is €7.
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Net profit before tax is calculated as follows:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 40 + 000 = €7.
The company's net profit before tax is €47.
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The total allocations amount to:
Total allocations = Depreciation + Depreciation.
Total allocations = €10.
The prize money is therefore €10.
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Self-financing capacity concerns:
CAF = Net result + Total allocations.
CIF = 40 + 000 = €10.
Aquarelle Décor has a self-financing capacity of €50.
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This self-financing capacity is substantial for the expansion and could be used to finance renovations without resorting to credits or subsidies.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciation + Amortization |
| Self-financing capacity | Net result + Total allocations |
Application: TechLens
States :
TechLens, an innovative company offering augmented reality solutions for schools, is preparing to launch a new educational product. The company generated a turnover of €5 this year and a net profit of €000. Depreciation and amortization related to their patents and equipment reach €000. The tax rate is set at 750%.
Work to do :
- Calculate the corporate tax payable by TechLens.
- Detail the net result before tax.
- Calculate the depreciation and amortization totals for the year.
- Calculate TechLens' self-financing capacity.
- Assess how this self-financing capacity could support the launch of the new product.
Proposed correction:
-
The corporate tax is found as follows:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 750 ÷ (000 – 1) x 0,30 = €0,30.
TechLens must pay €321 in taxes.
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Net profit before tax is determined by:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 750 + 000 = €321.
The net result before tax is therefore €1.
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The total allocations are given by:
Total allocations = Depreciation + Depreciation.
Total allocations = €200.
These grants total €200.
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The self-financing capacity is calculated by the equation:
CAF = Net result + Total allocations.
CIF = 750 + 000 = €200.
TechLens has a capacity of €950 to support its initiatives.
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This capacity represents a major asset in the development and launch of the new product, minimizing the need for external financing.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciation + Amortization |
| Self-financing capacity | Net result + Total allocations |
App: Harmony Healthcare
States :
Harmony Healthcare is a major player in the medical teleconsultation sector. With the growth in demand, it plans to launch a new application. For the past year, its turnover was €3, with a net profit of €200. Depreciation and amortization provisions amount to €000. The tax rate applied is 500%.
Work to do :
- Calculate Harmony Healthcare's corporate tax.
- Calculate the net income before tax.
- Deduct the totals from depreciation charges.
- Determine self-financing capacity.
- Analyze the possible impacts of this gross self-financing margin on the launch of the new application.
Proposed correction:
-
To calculate corporate tax:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 500 ÷ (000 – 1) x 0,27 = €0,27.
Harmony Healthcare has a tax of €184.
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Calculation of net profit before tax:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 500 + 000 = €184.
The gross profit before tax is €684.
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Sum of depreciation provisions:
Total allocations = Depreciation.
Total allocations = €120.
They total €120.
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Calculation of self-financing capacity:
CAF = Net result + Total allocations.
CIF = 500 + 000 = €120.
Harmony Healthcare thus obtains a self-financing capacity of €620.
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This gross self-financing margin provides a solid basis for the development and marketing of the new application, crucial for its competitiveness.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciations |
| Self-financing capacity | Net result + Total allocations |
Application: Gourmet Express
States :
Gourmet Express, famous for its fresh prepared meals delivered to your home, is exploring the diversification of its menu with gluten-free options. Its turnover is €450 with an annual net profit of €000. It has an equipment depreciation allowance of €60. The tax rate is set at 000%.
Work to do :
- Calculate the corporate tax required from Gourmet Express.
- Establish the net result before tax.
- Total the depreciation for the year for Gourmet Express.
- Determine self-financing capacity.
- Explore how self-financing could impact card diversification.
Proposed correction:
-
Calculation of the required corporate tax:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 60 ÷ (000 – 1) x 0,18 = €0,18.
Gourmet Express must pay tax of €13.
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To obtain the net result before tax:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 60 + 000 = €13.
The gross net result before tax is €73.
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The depreciation totals:
Total allocations = Depreciation.
Total allocations = €15.
Total prize money is €15.
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Self-financing capacity for Gourmet Express:
CAF = Net result + Total allocations.
CIF = 60 + 000 = €15.
The company has a margin of €75 in self-financing.
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This amount allows us to finance new products while ensuring continuous innovation of the card, thus supporting sustainable growth.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciations |
| Self-financing capacity | Net result + Total allocations |
Application: Celestial Skincare
States :
Celestial Skincare is known for its innovative skin care products. As it prepares to launch a new line of anti-aging products, it is looking at its internal financing capacity. The company has achieved a turnover of €1 and a net profit of €500. Depreciation and amortization allowance is estimated at €000, with a tax rate of 300%.
Work to do :
- Calculate corporate tax for Celestial Skincare.
- Determine the net income before tax.
- Add up the depreciation allowances.
- Determine self-financing capacity.
- Consider how cash flow could support the launch of the new product line.
Proposed correction:
-
Corporate Tax for Celestial Skincare:
Corporate tax = Net income ÷ (1 – tax rate) x tax rate.
Corporate tax = 300 ÷ (000 – 1) x 0,24 = €0,24.
The company must pay a tax of €94.
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Calculation of net profit before tax:
Net profit before tax = Net profit + Corporate tax.
Net profit before tax = 300 + 000 = €94.
The result before tax amounts to €394.
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The depreciation provisions total as follows:
Total allocations = Depreciation.
Total allocations = €50.
They amount to €50.
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Celestial Skincare's self-financing capacity:
CAF = Net result + Total allocations.
CIF = 300 + 000 = €50.
A self-financing capacity of €350 is available to the company.
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This self-financing amount is strategic to successfully launch the new line of anti-aging products, thus ensuring sustainable growth through internal finance.
Formulas Used:
| Title | Formulas |
|---|---|
| Corporation tax | Net income ÷ (1 – tax rate) x tax rate |
| Net income before tax | Net income + Corporate tax |
| Total allocations | Depreciations |
| Self-financing capacity | Net result + Total allocations |