Consider the following income statement for ABC Ltd. for the year ended on 31/12/2020 (all data expressed in ): Revenue 350,000 Cost of Sales -175,000 Gross Profit 175,000 Rent -26,000 Business rates -2,550 Wages -15,000 Bills -5,000 Bad Debt -500 Depreciation -5,700 Van expenses -3,000 Operating Profit 117,250 Interest expenses: -2,000 Profit for the year 115,250 (continues on next page...) And the following balance sheets for the same company: 31/12/2019 31/12/2020 Non-current assets: PPE at cost Accumulated depreciation PPE 120,000 77,700 42,300 134,000 83,400 50,600 Current assets: Inventories Trade Receivables Prepaid Expenses Cash 125,000 50,000 2,300 44,856 140,000 99,500 3,750 73,356 + Current liabilities: Trade Payables Accrued Expenses 100,000 500 90,000 500 Non-current liabilities: Bank Loan 47,500 45,000 Equity: Capital and Reserves 100,000 116,456 31/12/2019 31/12/2020 Non-current assets: PPE at cost Accumulated depreciation PPE 120,000 77,700 42,300 134,000 83,400 50,600 Current assets: Inventories Trade Receivables Prepaid Expenses Cash 125,000 50,000 2,300 44,856 140,000 99,500 3,750 73,356 Current liabilities: Trade Payables Accrued Expenses 100,000 500 90,000 500 Non-current liabilities: Bank Loan 47,500 45,000 Equity: Capital and Reserves 100,000 116,456 Retained Earnings 16,456 115,250 During 2020, ABC Ltd. acquired new PPE for 14,000 a. Prepare the cash flows statement for the year ended on 31/12/2020. What have been the main uses and sources of cash for ABC Ltd. during the year? [25 marks] b. Comment on the solvency and liquidity of the company using the ratios that you consider most appropriate. How have solvency and liquidity evolved in 2020? [10 marks] atta LITT