FINANCIAL MODELING INSTITUTE (FMI)

AFM Mini Exam Solution

Magic Beans Ltd.

September 6, 2023

Disclaimer
This model gives an indiciation of a possible solution model to the AFM Mini Exam
This is not an actual FMI exam or exam solution
All numbers and names in this case are fictional
 Magic Beans Ltd.
Inputs and Assumptions

GENERAL COSTS
- First year of forecast in financial model: 2021 Cost of Sales (as a % of total) 2020A
- Three scenarios have been used for Inflation, Product Price Growth Variable Costs 60.0%
and Sales Volume growth Fixed Costs 40.0%

SG&A 2020A 2021

SALES SG&A in $MM $572.9 $610.0
Grows at inflation after 2021
Core Business 2020A
Avg. Sales Price - $/Unit $85.0 per Unit
OTHER
Auxiliary Business
Revenue - $MM $574.5 MM Annual Cost Adjustment $0.0 MM
Annual Growth 3.5% per Year

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 Magic Beans Ltd.
Economic and Pricing Scenarios

SCENARIO SWITCH: 1 2021 2022 2023 2024 2025

ECONOMIC SCENARIOS

Cost Inflation 2.0% 2.0% 2.0% 2.0% 2.0%

Base Case 2.0% 2.0% 2.0% 2.0% 2.0%
Best Case -0.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Worst Case +0.5% 2.5% 2.5% 2.5% 2.5% 2.5%

SALES SCENARIOS

Price Growth 2.5% 2.5% 2.5% 2.5% 2.5%

Base Case 2.5% 2.5% 2.5% 2.5% 2.5%
Best Case +1.0% 3.5% 3.5% 3.5% 3.5% 3.5%
Worst Case -1.0% 1.5% 1.5% 1.5% 1.5% 1.5%

Sales Volume Growth 3.0% 3.0% 3.0% 3.0% 3.0%

Base Case 3.0% 3.0% 3.0% 3.0% 3.0%
Best Case +1.5% 4.5% 4.5% 4.5% 4.5% 4.5%
Worst Case -1.5% 1.5% 1.5% 1.5% 1.5% 1.5%

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Magic Beans Ltd.

Revenue Schedule

Projected
F2018A F2019A F2020A 2021 2022 2023 2024 2025
CORE BUSINESS
Pricing
Price Growth (%) 2.5% 2.5% 2.5% 2.5% 2.5%
Sales Price ($/unit) 85.0 87.1 89.3 91.5 93.8 96.2

Sales Volume
Volume Growth (%) 3.0% 3.0% 3.0% 3.0% 3.0%
Sales Volume (000's units) 48,512.9 49,968.3 51,467.4 53,011.4 54,601.7 56,239.8
Core Business Revenue ($ MM) 4,123.6 4,353.5 4,596.2 4,852.4 5,123.0 5,408.6

AUXILIARY SALES
Auxiliary Sales Growth (%) 3.5% 3.5% 3.5% 3.5% 3.5%
Auxiliary Sales ($ MM) 574.5 594.6 615.4 637.0 659.3 682.3
Total Revenue ($ MM) $4,698.1 $4,948.1 $5,211.6 $5,489.4 $5,782.2 $6,090.9

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Magic Beans Ltd.

Cost Schedule

Projected
F2018A F2019A F2020A 2021 2022 2023 2024 2025

Annual Sales Volume (000's units) 48,512.9 49,968.3 51,467.4 53,011.4 54,601.7 56,239.8
Cost Inflation (%) 2.0% 2.0% 2.0% 2.0% 2.0%

COST OF SALES - PER UNIT

Variable Costs ($/unit) 35.2 35.9 36.6 37.4 38.1 38.9
Fixed Costs ($/unit) 23.5 23.3 23.0 22.8 22.6 22.4
Total Costs ($/unit) 58.7 59.2 59.7 60.2 60.7 61.2

COSTS OF SALES - US$MM

Variable Costs
As a % of Cost of Sales (%) 60.0% 60.7% 61.4% 62.1% 62.8% 63.5%
Variable Costs ($ MM) 1,708.5 1,795.0 1,885.8 1,981.2 2,081.4 2,186.8

Fixed Costs
As a % of Cost of Sales (%) 40.0% 39.3% 38.6% 37.9% 37.2% 36.5%
Fixed Costs ($ MM) 1,139.0 1,161.8 1,185.0 1,208.7 1,232.9 1,257.5

Total Cost of Sales ($ MM) 2,847.5 2,956.7 3,070.8 3,189.9 3,314.3 3,444.3

SG&A ($ MM) 572.9 610.0 622.2 634.6 647.3 660.3

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Magic Beans Ltd.

Income Statement

Projected
F2018A F2019A F2020A 2021 2022 2023 2024 2025

Revenue ($ MM) 4,235.7 4,482.9 4,698.1 4,948.1 5,211.6 5,489.4 5,782.2 6,090.9

Cost of Sales ($ MM) 2,649.7 2,822.7 2,847.5 2,956.7 3,070.8 3,189.9 3,314.3 3,444.3
SG&A ($ MM) 519.4 544.7 572.9 610.0 622.2 634.6 647.3 660.3
Total Costs ($ MM) 3,169.1 3,367.4 3,420.4 3,566.7 3,693.0 3,824.6 3,961.7 4,104.6

Cost Adjustments - (Gain) / Loss ($ MM) (7.2) (4.5) 76.1 0 0 0 0 0

EBITDA ($ MM) 1,073.8 1,120.0 1,201.6 1,381.4 1,518.6 1,664.8 1,820.5 1,986.3

Revenue Growth (%) 5.8% 4.8% 5.3% 5.3% 5.3% 5.3% 5.3%
COGS Margin (% of revenue) (%) 62.6% 63.0% 60.6% 59.8% 58.9% 58.1% 57.3% 56.5%
EBITDA Margin (% of revenue) (%) 25.4% 25.0% 25.6% 27.9% 29.1% 30.3% 31.5% 32.6%

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