Davids books of account showed the following figures for the year ended 31 December 2017:

$

Revenue 400 000 Ordinary goods purchased 290 000 Profit from operations 45 000

Davids balances at 31 December 2017 were:

Inventory 25 000 Trade receivables 80 000 Cash and cash equivalents 20 000 Trade payables 50 000 Finance costs (interest owing) 25 000 Non-current assets at net book value 120 000

Additional information:

1. 80% of revenue was on credit

2. Inventory at 1 January 2017 was $35000

3. Trade payables and trade receivables balances were unchanged since 1 January 2017.

REQUIRED

1. (a) Calculate the following ratios, correct to two decimal places, in each case stating the formula used.

   1. (i) Gross Profit Mark-up

   2. (ii) Inventory turnover

   3. (iii) Trade receivables turnover

   4. (iv) Trade Payables turnover

   5. (v) Operating expenses to revenue ratio

   6. (vi) Current ratio

   7. (vii) Acid test/liquid ratio

   8. (viii) Non-current asset turnover.

2. (b) Examine the possible consequences of running a partnership business without drawing a proper Deed of Partnership at the beginning.

3. (c) Discuss the treatment of goodwill in partnership books with regards to admission and retirement of partners.