8 Forecast cash flow statement. Avionics Ltd manufactures and supplies electronic components to the aircraft industry. The company’s forecast profit and loss account together with a forecast balance sheet for the year ahead and the balance sheet for the year just ended are presented below.

Avionics Ltd Forecast Profit and Loss Account for year ahead

£m Sales 7.23 Cost of sales 3.83 Gross profit 3.40 Operating expenses 1.73 Depreciation 0.65 Operating profit 1.02 Interest 0.07 0.95 Taxation 0.28 Profit after tax 0.67 Dividends 0.10 Retained profits for the year 0.57 Avionics Ltd Balance Sheet as at year end Forecast £m Previous £m Fixed assets Tangible assets 2.60 3.25 Current assets Stocks 0.63 0.50 Debtors 1.09 0.87 Cash 1.13 0.06 2.85 1.43 Current liabilities Creditors and accruals 0.61 0.49 Taxation 0.28 0.22 Dividends 0.10 0.08 Net current assets 1.86 0.64 Total assets less current liabilities 4.46 3.89 Non-current liabilities Term loan 0.50 0.50 3.96 3.39 Capital and reserves Called up share capital 2.50 2.50 Profit and loss account 1.46 0.89 3.96 3.39 Required:
Using the above information prepare a forecast cash flow statement for Avionics and comment on your findings.