Interpretation of Accounts The following information has been taken from the accounts of Goggin Ltd for the year ended 31/12/2016 Trading and Profit and Loss Account for the year ended 31/12/2016 Credit sales € 675,000 Less: Cost of sales Stock 01/01/2016 €????? Add: credit purchases 360,000 Less: Stock 31/12/2016 16,000 Cost of sales €368,000 Gross Profit €307,000 Total expenses (including interest paid €8,000) Net profit for year €171,000 Balance Sheet as at 31/12/2016 € Fixed Assets Cost 900,000 Depreciation 40,000 NBV 950,000 Current Assets (including trade debtors €30,000) 94,000 Less Creditors: amounts falling due within 1 year Trade creditors 53,000 41,000 Total €991,000 Financed by: Creditors: amounts falling due after more than 1 year 8% Debentures (2023/2024) 100,000 Capital and Reserves Authorised Issued Ordinary shares at €1 each 900,000 720,000 Profit and loss account 991,000 (a) You are required to calculate: (to 2 decimal places where appropriate) - Leaving Cert Accounting - Question 5 - 2017

The rate of stock turnover can be calculated using the following formula:

Where Average Stock is given as:

Hence, substituting into the formula:

Return on Capital Employed (ROCE) is calculated as:

Substituting the known values:

Calculating ROCE:

The period of credit received from creditors can be calculated using:

Substituting the values:

Authorised Share Capital refers to the maximum amount of shares a company can issue. For Goggin, this is €900,000, indicating the total value of shares that can be issued to shareholders. This means that Goggin can raise funds from the public up to this limit.

Trade creditors are the amounts owed by the company to suppliers for goods and services purchased on credit. In this case, Goggin has trade creditors amounting to €53,000, showing the debts incurred to be settled in the short term.

Liquid assets are current assets that can be easily converted into cash. Goggin's liquid assets, including cash and trade debtors, total €78,000 (after considering its current liabilities). This reflects the company's liquidity position.

Interest paid refers to the cost of borrowing money, which in this case amounts to €8,000 for Goggin. It represents an expense incurred to finance operations, impacting profitability.

The acid test ratio is calculated as follows:

An acid test ratio of 1.47 indicates that for every €1 of current liabilities, Goggin has €1.47 in liquid assets. This suggests that the company is in a good position to meet short-term obligations without relying on the sale of inventory.

The return on capital employed for Goggin Ltd has increased from 16% in 2015 to 18.06% in 2016, demonstrating a positive trend in profitability. This increase of 2.06% suggests that the business is efficient, indicating better management of resources and a strong profitability outlook compared to previous years.