Profit and loss account, return on assets and return on equity

Problem statement

(3 marks) The company “SPLASHCESSORIES, S.L.”, which sells swimming pool equipment and accessories, gives the following information on its income and expenses during the 2025 financial year: sales of goods: €180,000; rent (premises, company vehicle): €34,000; depreciation of property, plant and equipment: €500; purchases of goods: €45,000; advertising expenses: €9,000; interest received on current accounts: €2,000; interest paid on short-term debts: €1,500; interest on a long-term loan: €3,500; employer's social security contributions: €10,800; wages and salaries: €36,000; utilities (electricity, water): €9,700. The corporation tax rate is 25%.

Taking the above information into account, and given that total liabilities are €47,000 and equity is €40,000, you are asked to:

a) Prepare the profit and loss account for 2025 in line with the Spanish General Accounting Plan, identifying the operating profit (0.5 marks), the financial result (0.2 marks) and the net profit (0.3 marks).

b) Calculate and interpret the return on assets (0.5 marks).

c) Answer one of these two sub-questions:

c.1) Calculate and interpret the return on equity of the company “SPLASHCESSORIES, S.L.” (0.5 marks). Explain how an increase in interest on debt would affect the return on equity (0.5 marks) and the return on assets (0.5 marks).

c.2) Explain Maslow's Theory of Motivation (1 mark). If the company's workers fit McGregor's Theory X, how could a worker be motivated? Justify your answer (0.5 marks).

Source: Madrid university entrance exam (PAU, Spain) · 2025-2026 · Ordinary session · Business Studies · Question 4. Official exam set by the public universities of the Community of Madrid, to whom it belongs; translated from Spanish and reproduced with its source in order to explain it for teaching purposes.