The following information has been extracted from the draft financial information of V Ltd:

Dividend paid = £52,000

(a) You are required to prepare a cash flow statement for V Ltd for the year ended 31 December 2003 in accordance with the requirements of Financial Reporting Standard 1 (FRS 1).

(b) It has been suggested that the management of long-term profitability is more important than short-term cash flow. Explain why this might be so.

Transcribed Image Text:

Profit and Loss Account for the year ended 31 December 2003 Sales Raw materials consumed Staff costs Depreciation Loss on disposal Operating profit Interest payable Profit before tax Taxation 000 000 495 (49) (37) (74) (4) (164) 331 (23) 308 (87) 221