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

(a) You are required to prepare a statement of cash flows for V Ltd for the year ended 31 December 2003 in accordance with the requirements of IAS 7.

(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.

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Income Statement for the year ending 31 December 2003 Revenue Raw materials consumed Staff costs Depreciation Loss on disposal Operating profit Interest payable Profit before tax Taxation Profit for the year Note: Dividend paid = 52,000 000 000 495 (49) (37) (74) (4) (164) 331 (23) 308 (87) 221