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The balance sheet of a sole trader revealed the following position. Fixed Assets R R Land and buildings Equipment at cost less depreciation 9 170
The balance sheet of a sole trader revealed the following position. Fixed Assets R R Land and buildings Equipment at cost less depreciation 9 170 15 570 Goodwill at cost less amounts written off 10 250 34 990 Investment in shares at cost 2 200 Current assets Trading stock Sundry debtors less bad debt written off Cash at bank 45 840 19 350 10 920 76 110 13 300 = A Less: current liabilities Sundry creditors and Accruals 77 600 = 35 700 Owner's interest Capital Profit for the year 28 400 7 300 35 700 = 0 Required Answer the following questions. a) Are the assets correctly classified? If not, rearrange them and give your reasons for doing this. b) What is the current ratio? Is it satisfactory? c) What is the acid test ratio? Is it satisfactory? d) is the business overtrading? Give your reasons. e) What is the profitability ratio of the business
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