David's books of account showed the following figures for the year ended 31 December 2017: $ 400 000 Revenue 290 000 45 000 Ordinary goods purchased Profit from operations David's balances at 31 December 2017 were: 25 000 Inventory Trade receivables 80 000 20 000 50 000 Cash and cash equivalents Trade payables Finance costs (interest owing) Non-current assets at net book value 25 000 120 000 Additional information: 1 80% of revenue was on credit Inventory at 1 January 2017 was $35000 Trade payables and trade receivables balances were unchanged since 1 January 2017 2 3 REQUIRED (a) Calculate the following ratios, correct to two decimal places, in each case stating the formula used. Gross Profit Mark-up Inventory turnover Trade receivables turnover (i) (ii (iii) (iv) (v) (vi) (vii) (viii Trade Payables turnover Operating expenses to revenue ratio Current ratio Acid test/liquid ratio Non-current asset turnover. (16 marks) (b) Examine the possible consequences of running a partnership business without drawing a proper Deed of Partnership at the beginning. (4 marks) (c) Discuss the treatment of goodwill in partnership books with regards to admission and retirement of partners. (5 marks) Page 3 of 6 3333 David's books of account showed the following figures for the year ended 31 December 2017: $ 400 000 Revenue 290 000 45 000 Ordinary goods purchased Profit from operations David's balances at 31 December 2017 were: 25 000 Inventory Trade receivables 80 000 20 000 50 000 Cash and cash equivalents Trade payables Finance costs (interest owing) Non-current assets at net book value 25 000 120 000 Additional information: 1 80% of revenue was on credit Inventory at 1 January 2017 was $35000 Trade payables and trade receivables balances were unchanged since 1 January 2017 2 3 REQUIRED (a) Calculate the following ratios, correct to two decimal places, in each case stating the formula used. Gross Profit Mark-up Inventory turnover Trade receivables turnover (i) (ii (iii) (iv) (v) (vi) (vii) (viii Trade Payables turnover Operating expenses to revenue ratio Current ratio Acid test/liquid ratio Non-current asset turnover. (16 marks) (b) Examine the possible consequences of running a partnership business without drawing a proper Deed of Partnership at the beginning. (4 marks) (c) Discuss the treatment of goodwill in partnership books with regards to admission and retirement of partners. (5 marks) Page 3 of 6 3333