Ace

Manager 4 - The Passing Shot

Guidelines

Table of contents

Accounting, Legal and Tax Global Context .................................................................................................... 2 Scoring Rules ................................................................................................................................................ 4 Excel Spreadsheets Guide .............................................................................................................................. 8

I. Accounting, Legal and Tax Global Context

Here are few indications about the global context; these elements will be enriched with new data as one goes along the cases development.

Legal and tax global context

Universe City has a competitive tax and regulatory environment in order to attract new investment and to promote investment and innovation at the firm level, where tax and regulatory policies have a large impact on business decisions. Currently, Universe City has a very low-cost business environment. A recent study named Universe City as the lowest- cost jurisdiction in which to do business. Indeed, the high level of technology infrastructure, the low cost of telecommunications, and a highly educated population suggests Universe City has the right mix of factors to become a destination for international investment. In terms of taxation policy, Universe City has in recent years made good progress, with announcements in the last two budgets allowing for a phase out of the capital tax and decreasing significantly structural impediments to investment. Indeed, while business costs in Universe City are low, more work needs to be done to improve the regulatory sides of the business environment. The fundamental challenge is to make Universe City an even more attractive place to live, work and invest. While past reforms have begun to pay off, there is still unfinished business. Universe City needs a strategic plan for long-term economic growth a plan that must include a competitive tax system that encourages effort, saving, investment and risk taking by firms and individuals. Such a tax system will work to enhance productivity and promote sustainable long-term economic growth and must prioritize and focus on those areas that can directly affect Universe City productivity and competitiveness, and enhance the economy's ability to grow and mainly within the sector of renewable energy. Corporation Tax o 20 % rate if profits are between 0 and 500 000 Aces o 25 % rate if profits are between 500 001 and 1 500 000 Aces o 30 % rate if profits are above 1500 001 Aces

 Accounting context
At Universe City, all companies use International accounting standards of IFRS Foundation and the IASB. The IFRS Foundation is an independent, not-for-profit private sector organization working in the public interest. Its principal objectives are: - to develop a single set of high quality, understandable, enforceable and globally accepted international financial reporting standards (IFRSs) through its standard-setting body, the IASB; - to promote the use and rigorous application of those standards; - to take account of the financial reporting needs of emerging economies and small and medium-sized entities (SMEs); and - to bring about convergence of national accounting standards and IFRSs to high quality solutions. The governance and oversight of the activities undertaken by the IFRS Foundation and its standard-setting body rests with its Trustees, who are also responsible for safeguarding the independence of the IASB and ensuring the financing of the organization. The Trustees are publicly accountable to a Monitoring Board of public authorities. Standard-setting The IASB (International Accounting Standards Board) The IASB is the independent standard-setting body of the IFRS Foundation. Its members (currently 15 full-time members) are responsible for the development and publication of IFRSs, including the IFRS for SMEs and for approving Interpretations of IFRSs as developed by the IFRS Interpretations Committee (formerly called the IFRIC). All meetings of the IASB are held in public and webcast. In fulfilling its standard-setting duties the IASB follows a thorough, open and transparent due process of which the publication of consultative documents, such as discussion papers and exposure drafts, for public comment is an important component. The IASB engages closely with stakeholders around the world, including investors, analysts, regulators, business leaders, accounting standard-setters and the accountancy profession. The IFRS Interpretations Committee The IFRS Interpretations Committee (formerly called the IFRIC) is the interpretative body of the IASB. The Interpretations Committee comprises 14 voting members appointed by the Trustees and drawn from a variety of countries and professional backgrounds. The mandate of the Interpretations Committee is to review on a timely basis widespread accounting issues that have arisen within the context of current IFRSs and to provide authoritative guidance (IFRICs) on those issues. Interpretation Committee meetings are open to the public and webcast. In developing interpretations, the Interpretations Committee works closely with similar national committees and follows a transparent, thorough and open due process. Source: www.ifrs.org

II. Scoring Rules

Awarding of teams' starting capital
At the start of the Competition, each Qualified Team will benefit from the same starting capital of 100,000 Aces, which is the legal tender in Universe City. The teams receive a bonus of 500 Aces (added to the starting capital) if at least two members of the Team who have registered for the Competition are students of different nationalities. Each team can only receive this 500 Ace bonus once.

Business Cases (main inquiries)

Each team can answer all the business cases (main inquiries). Each business case can bring a maximum number of points (in Aces), according to the difficulty level as shown on the case presentation page. The team receives a number of points pro-rata to its correct answer, out of the maximum number of points shown on the case presentation screen. Each main inquiry consists of one or several questions that the Qualified Team takes a position on using the interactive method suggested for answering them (multiple-choice questions, drag and drop, fill in the blank exercises or other simple interactive methods). For all of these interactive methods, except for the fill in the blank exercises, the answers given by the Teams are either right (1 point awarded) or wrong (0 points awarded). For exercises whose answer must be given in figures, in order to avoid any risk of interpreting the number of figures expected after the comma and their rounding rules, note that: 1. Degree of accuracy: All figures must be submitted with the number of decimal digits specified in the case statement. Please note that the following code has been adopted to specify the format under which each figure has to be submitted: n? = No decimal digit n?.? = 1 decimal digit n?.?? = 2 decimal digits

n?.??? = 3 decimal digits n?.???? = 4 decimal digits

2. Rounding: In the process of solving a complex numerical problem, all decimal points need to be used and carried forward until the final result is obtained (unless differently stated in the business case). Example: if in a financial case, a figure must be submitted with 2 decimal digits (?.??), and some intermediary calculations lead to figures with 5 decimal digits, figures with the entire decimal digits must be used until the final calculation. The rounding must be done only in the interface of the game. In addition, if in a second part of the financial case, an answer of the first part is needed, the exact values (the figure with the entire decimal digits) of the answer, and not the rounding form, must be used to do the new calculation. 3. Margin of errors: The error margins will vary from case to case. These margins of error contain 2 intervals. See the detail below:

Case # 1 2 3 4 5 6 7 8 9 10 11 12

1st interval (1 point). 2nd interval (0.9 point). Answer inferior to: Answer inferior to: +/-1.5% +/-2,5% +/-1% +/-1.5% +/-1.5% +/-2.5% +/-1.5% +/-2.5% +/-0.5% +/-1% +/-1.5% +/-2.5% +/-1.5% +/-2.5% +/-1.5% +/-2.5% +/-1% +/-1.5% +/-1.5% +/-2.5% +/-0.5% +/-1% +/-1.5% +/-2.5%

Example: Let us assume that each correct answer brings 1 point. In case number 4, if the expected answer of a question is 0.544, all answers included between 0.552 (excluded) and 0.536 (excluded) will bring 1 point. All answers included between 0.558 (excluded) and 0.552 (excluded) or between 0.536 (excluded) and 0.530 (excluded) will bring 0.9 points. All the answers superior or equal to 0.558 or inferior or equal to 0.530 will bring 0 point.

Given this relatively small margin of error, the use of a program like Microsoft Excel is strongly recommended for finance cases in order to prevent any mistakes due to the use of excessive approximations or incorrect rounding in your calculation. Best practices on how to use advanced features on Excel are explained below. All the points awarded will be totaled up for comparison against the sum of the potential points, which will be used to calculate the correct response rate for each part of a case. This rate, when applied to the number of points in play for each part, will lead to the awarded Aces according to the number of Aces in play. 4. Numerical values: When completing a numerical question, the sign must be indicated wherever necessary. For example: What is the percentage change from 12 to 14.5? Answer: 20.83% What is the percentage change from 14.5 to 12? Answer: -17.24% In the world of business and finance, many different conventions exist with regard to the signs of numerical values. For simplicity, teams must apply the following rule: the negative sign is used only if the value of the item is not of the sign it is supposed to be. Giving an example, in an Income Statement (or P&L) a cost of five thousand Aces will be indicated as 5,000 " and a net profit of three thousand Aces will be indicated as " 3,000 ". However, if the company has a loss of two thousand Aces, the net profit will read -2,000 ".

Combo
Each team can also receive one or more bonuses linked to the successful and consecutive completion (100%) of at least 2 business cases (main inquiries) and at the most 7. The larger the number of business cases successfully and successively completed, the larger the number of Aces awarded for this achievement. Within the context of the Competition, this reward system is known as the "Combo". The "combos" obtained are totaled up.

Number of consecutive solved successfully 2 3 4 5 6 7

business

cases number of Aces allocated for these consecutive successes 100 200 500 800 1 000 1 500

Multiple Choice Questions (secondary inquiries)

Secondary inquiries are a type of quiz presenting a series of multiple choice questions, which the Teams must answer to win points in the form of Aces within a limited time, clearly stated in the Competition interface. These secondary inquiries are independently scored using a different method from the main inquiries as it based on totaling up the individual scores obtained by each Participant making up the Qualified Team. 4 secondary inquiries will be proposed during the on-line competition phase, with each inquiry offering the Participants of each Qualified Team the chance to answer questions on the same theme. Each secondary inquiry contains 5 questions and the Team will have 20 seconds to answer each question. Each question brings 100 Aces. All of the Aces obtained by each Participant of the same Qualified Team will be totaled up to arrive at the number of Aces obtained by the team at the end of each secondary inquiry.

Special case: Interactive interviews:

The first viewing of interactive interview is free. However, any team who views the same interactive interview twice will be charged 500 Aces. Please note that 500 Aces is the cost EACH time an interactive interview is launched after the first viewing.

III. Excel Spreadsheets Guide

Microsoft Office Excel spreadsheets are widely used in business and finance, e.g. to store and analyze data, perform valuations or build models. As a team of analysts at BNP Paribas, you will need to use spreadsheets. Here you can find a few suggestions regarding Excel modeling and a list of the functions that will be useful through the game. Before starting, an analyst should ask himself the following questions: What is the scope of the model? How complex will it be? Does it need to be flexible with regard to its assumptions? How should it look like at the end? This will help to better elaborate the spreadsheet.

Some simple suggestions

Use referencing: this means linking cells to other cells instead of coping and pasting the values contained in them. This has several advantages, in particular that the whole calculations will reflect changes in the inputs in case these are changed and also that when referencing is used, it is easier to track the evolution of the model and how numbers are generated. Remember that, when performing a calculation, you need to use all the decimals available until you find the final result: referencing will do that. In many occasions, it is necessary to copy formulas that contain a reference to other cells: in this case it is possible to render part or all of the reference absolute using the $ (dollar) symbol. Press 3 subsequent times the F4 key when the reference to a cell is highlighted in a formula and you will see the different possible combinations. The $ before the column letter makes the column absolute (e.g., $M3), the $ before the row number makes the row absolute (e.g. M$3). A smart way to do referencing in some cases is to name cells. Assume, for example, that many calculations in the model depend on the inflation rate, which is contained in the cell B2. You can name the B2 cell inf and then, every time you write a formula containing the inflation rate, write inf instead of B2 or $B$2, so that you dont have to go look for the cell containing the inflation rate (very useful if the cell is in a different worksheet); at the same time, double-checking a formula is much easier if you read inf instead of B2.

Tool and Formulas

Goal Seek: this is a very useful and powerful item. It can be found in the main menu bar, tools, goal seek. It can be used to find the value of a formulas input that will make the formulas result equal to a specific number. Lets say that the formula is in cell A1, the input is in cell A2 and we want to find the value of the input that will make A1 equal to 1000. Access the goal seek and select: Set cell = A1, To value = 1000, By changing cell = A2 and click OK. Excel will find the value searched and will put it into A2. IRR: This is a function that can be used to find the internal rate of return of an investment. Write the investment cash flow amounts in a row in the order that they are supposed to happen. If in one or more periods there is no cash flow, write 0 in the corresponding cell. The first cell on the left contains the initial outflow; make sure that it is written as a

negative number. Now go to an empty cell and write =IRR() then select the cells containing the cash flows and press Enter to let Excel find the rate of return. NORMSDIST: This is a statistical function that returns the standard normal cumulative distribution. It is used to solve the Black and Scholes formula. NORMSINV: Returns the inverse of the standard normal cumulative distribution. For example, by entering the value 0.75, the result is 0.67. This means that, in a normal distribution with mean equal to 0 and standard deviation equal to 1, 75% of the observations are be below 0.67. Other useful functions are: MIN, MAX, MINVERSE, TRANSPOSE, MMULT, AVERAGE, LINEST, STDEV, VAR, COVAR, IF, EXP, LN, ABS. Remember that in some versions of Microsoft Office Excel some of these functions are written in a slightly different way. More information can be found at office.microsoft.com/en-gb/ or on dedicated websites like ExcelFunctions.net.