QUESTION ONE (25 marks) Ella is the owner of a dance studio, teaching Ballet, Spanish and Tap dance. As part of her studio, she also has: a shop where her students can purchase the necessary accessories; and gym equipment available to her students should rehabilitation and development exercises be necessary Ella approached you for advice concerning her business. She handed you the following annual financial statements: ELLA ENCHANTED STATEMENT OF FINANCIAL POSITION ON 31 DECEMBER 2020 2020 2019 R R R R 163 500 161 400 ASSETS Non-current assets Equipment at cost Accumulated depreciation equipment Furniture at cost Accumulated depreciation: furniture 120 000 (25000) 85 000 (16 500) 120 000 (10 000) 60 000 (8 600) 187 100 233 700 Current assets Inventory Trade debtors 30 000 6 100 151 000 20 000 5 700 208 000 Bank TOTAL ASSETS 350 600 395 100 EQUITY AND LIABILITIES Capital 250 000 250 000 Non-current liabilities 64 000 86000 Longterm loan 64 000 86000 59 100 Current liabilities Accrued expenses Trade creditors TOTAL EQUITY AND LIABILITIES 6 500 30 100 9 100 50 000 350 600 395 100 ELLA ENCHANTED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 Total income Cost of sales Gross profit Total expense Profit for the year 450 000 (320 000) 130 000 (65 000) 65 000 Ella also disclosed the following additional information: She sold equipment with a cost price of R20 000 and accumulated depreciation of R4 000 for R7 500 cash during the year. New equipment was purchased for R20 000 to replace the old equipment and paid for by cheque. MARKS YOU ARE REQUIRED TO: Calculate the following ratios for 2020 financial year. Current ratio Acid test ratio Gross profit percentage Net profit percentage Return on capital Inventory turnover rate (months) Debtors collection period (days) Creditors payment period (days). Please write down the formula for each ratio before you do the calculation TOTAL MARKS 25 25