Which risk is directly introduced by not accounting for intercompany sales in the offer calculations?

• A. Reduced cash flow due to currency risk
• B. Distorted profitability due to unrecorded intercompany revenues
• C. Increased regulatory burden
• D. Higher production costs

Answer: (B)

Profitability is what offer calculations want to reflect. When deals involve intercompany sales, those internal transactions create revenues and costs that don’t exist as external business activity in the same way. If you skip accounting for them in the bid model, you end up with a distorted view of how profitable the deal really is for the group. Intercompany revenues are typically eliminated in consolidated accounts, so failing to include or properly adjust for them can make margins look higher or lower than they would on an external sale, leading to a misleading profitability picture. That direct misrepresentation of profitability is the central risk here, whereas currency movements, regulatory load, or production costs aren’t inherently tied to whether intercompany sales are captured in the offer model.