Shown below are the summarized final accounts of Martel plc for the last two financial years:

Summarised statement of comprehensive income for the year ending 31 December

Additional information:

1 The movement in non-current assets during the year ended 31 December 20X1 was as follows:

The plant and machinery disposed of during the year was sold for £20,000.

2 During 20X1, a rights issue was made of one new ordinary share for every eight held at a price of £1.50.

3 A dividend of £36,000 (20X0 £30,000) was paid in 20X1. A dividend of £72,000 (20X0 £40,000) was proposed for 20X1. A transfer of £50,000 was made to the general reserve.

Required:

(a) Prepare a statement of cash flows for the year ended 31 December 20X1, in accordance with IAS 7.

(b) Prepare a report on the liquidity position of Martel plc for a shareholder who is concerned about the lack of liquid resources in thecompany.

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Statements of financial position as at 31 December 20XI 20X0 £000 £000 £000 £00 Non-current assets Tangible Land and buildings Plant and machinery Motor vehicles 1,464 1,098 520 194 140 62 2,124 1,354 Current assets Inventory 504 330 Trade receivables 264 132 Government securities 40 Bank 22 808 484 Current liabilities Trade payables 266 220 Taxation 120 50 Proposed dividend 72 40 Bank overdraft 184 642 310 166 Net current assets 174 2,290 Total assets less current liabilities 1,528 Non-current liabilities 9% debentures (432) (350) 1,858 1,178 20XI 20X0 £000 £000 £000 £000 Capital and reser ves Ordinary shares of 50p each fully paid Share premium account Revaluation reserve 900 800 120 70 360 General reserve 00 50 Retained earnings 378 258 958 378 1,858 1,178