AF Partners reported a profit of $114,000 for the year. The statement of profit or loss also showed

depreciation expenses of $12,000 and a loss on the sale of a motor vehicle of $3,000. The statement of financial position showed a decrease in account receivable of $7,500 for the year, an increase in

inventory of $4,500 and a decrease in account payable of $6,000.

Required:

Prepare a reconciliation of profit to cash flows from operating activities using the indirect method and give your interpretation!