Leaving Cert Accounting Interpretation of Accounts: Interpretation of Accounts
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Question

Interpretation of Accounts
The following are the actual figures for the year ended 31/12/2006 and the projected figures for the year ended 31/12/2007 of Mila Plc, a manufacturer in the pharmaceutical industry. Mila Plc has an authorised share capital of 60,000 ordinary shares at €1 each and 250,000 6% preference shares at €1 each. The firm has already issued 325,000 ordinary shares and all the preference shares.

Trading and Profit and Loss account for year ended 31/12/2006

Sales                                       €
Opening Stock                          50,000
Closing Stock                          55,000
Cost of goods sold                   €615,000
Gross Profit                              205,000
Operating expenses for year        130,000
Interest                                      67,000
Dividends                                 70,000
Retained Profit                            6,000
Profit and Loss Balance 1/1/2006    38,000
Profit and Loss Balance 31/12/2006   47,000

Balance Sheet as at 31/12/2006          €

Fixed Assets                                  680,000
Investments (market value 31/12/2006 €210,000)
                                                    188,000
Current Assets                                187,000
Current Liabilities                           368,000
Trade Creditors                              
Proposed Dividends                            (31,000) 
                                                            54,000

Financed by:
9% Debentures (2014 secured)         622,000
Capital and Reserves:
Ordinary Shares €1 each                   325,000
Preference Shares €1 each                 250,000
Profit and Loss Balance                      47,000
                                                            922,000

Market value of one Ordinary Share €1.20

You are required to calculate the following for 2006

(a)
(i) The Cash Purchases
(ii) The Interest Cover.
(iii) The Dividend Yield.
(iv) The period to recoup price.
(v) Projected Market Value of Ordinary Share.

(b) Performance
(c) Bank Loan Application.

Interpretation of Accounts The following are the actual figures for the year ended 31/12/2006 and the projected figures for the year ended 31/12/2007 of Mila Plc, a manufacturer in the pharmaceutical industry - Leaving Cert Accounting - Question 5 - 2007

Worked Solution & Example Answer:Interpretation of Accounts The following are the actual figures for the year ended 31/12/2006 and the projected figures for the year ended 31/12/2007 of Mila Plc, a manufacturer in the pharmaceutical industry - Leaving Cert Accounting - Question 5 - 2007

The Cash Purchases

The Interest Cover

The Dividend Yield

The Period to Recoup Price

Projected Market Value of Ordinary Share

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