1.3	Explain why depreciation is added to operating profit in computing the cash flow from operating activities.
		(2 marks)
1.4	There is a combination of a positive cash flow from operating activities of R1 504 000 and a negative cash flow from investing activities of R8 384 000. Is this favourable for Sinclair Ltd? Provide THREE (3) reasons for your answer.
		(6 marks)
1.5	Comment on the following:
1.5.1	Decrease in inventory, R264 000	(2 marks)
1.5.2	Increase in receivables, (R3 712 000)	(2 marks)

INFORMATION

SINCLAIR LTD
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021
	R
Cash flows from operating activities	1 504 000
Profit before interest and tax/Operating profit	10 136 000
Adjustments to convert to cash from operations
Non-cash flow adjustments	6 176 000
Depreciation	6 000 000
Loss on disposal of equipment	176 000
Profit before working capital changes	16 312 000
Working capital changes	(4 112 000)
Decrease in inventory	264 000
Increase in receivables	(3 712 000)

Decrease in payables	(664 000)
Cash generated from operations	12 200 000
Interest paid	(3 744 000)
Dividends paid	?
Income tax paid	(2 880 000)
Cash flows from investing activities	(8 384 000)
Non-current assets purchased	(10 576 000)
Proceeds from sale of equipment	2 192 000
Cash flows from financing activities	8 640 000
Proceeds from issue of ordinary shares	2 880 000
Increase in long-term borrowings	5 760 000
Net increase in cash and cash equivalents	?
Cash and cash equivalents at beginning of year	1 440 000
Cash and cash equivalents at the end of year	?