Below is the Statement of Cashflows for the year 2019 of ABC Corp and answer the questions that follow in the space provided:

Cashflow from Operating Activities

Cash Collections

Sales

3,200,000.00

Increase in Receivables

(60,000.00)

3,140,000.00

Interest Revenue

40,000.00

Decrease in Interest Receivable

2,000.00

42,000.00

Cash Payments to Suppliers

COGS

(1,620,000.00)

Decrease in Inventory

60,000.00

Decrease in Accounts Payable

(16,000.00)

(1,576,000.00)

Cash payments for

Operating Expenses

(1,240,000.00)

Operating Expenses

Depreciation

150,000.00

Increase in Prepayments

(6,000.00)

Decrease in accruals

(8,000.00)

(1,104,000.00)

Cash Payments for Interest

Interest Expense

(42,000.00)

Increase in interest payable

4,000.00

(38,000.00)

Cash Payments for Tax

Tax Expense

(100,000.00)

Decrease in tax payable

(14,000.00)

(114,000.00)

Cashflows provided by Operating Activities

350,000.00

Cashflow from Investing Activities

Investments in Securities

(60,000.00)

Sale of Securities

72,000.00

12,000.00

Investments in Plant Assets

(500,000.00)

Sale of Plant Assets

24,000.00

(476,000.00)

Cashflows used by Investing Activities

(464,000.00)

Cashflows from Financing Activities

Repayments of Long Term Notes Payable

(92,000.00)

Proceeds from Long Term Notes Payable

82,000.00

(10,000.00)

Issuance of CS

Par Value

20,000.00

Additional Paid In Capital

160,000.00

180,000.00

1) Carry out a complete analysis of tbe above figures. Comment on the companys Statement of Cashflows by looking at the sources and uses of funds.

2) Explain the primary reason why:

a) The amount of cash provided by operating activities was substantially greater than the companys net income of USD 260,000

b) There was a net decrease in cash over the year, despite the substantial amount of cash provided by operating activities.

3) The Companys controller thinks that through more efficient cash management, the company could have held the increase in accounts receivable for the year to $10,000, without affecting net income. Explain how holding down the growth in receivables affects cash. Compute the effect that limiting the growth in receivables to $10,000 would have had on the companys net increase or decrease in cash (and cash equivalents) for the year.