Fresh Catch Pte Ltd is an importer and distributor of seafood in Singapore.

The following is the Statement of Cash Flows for Fresh Catch Pte Ltd for the financial year ended 31 December 2022.

*The auto-packaging system is expected to help to overcome manpower shortages faced by the company.

Required:

(a) The CEO was puzzled that despite a net profit of $249,375, the bank account decreased from $205,670 on 1 January 2022 to $74,070 on 31 December 2022. Examine and explain to the CEO the main causes and comment on the company's cash level.

(b) Based on the Statement of Cash Flows, identify the possible business actions, Fresh

Catch Pte Ltd can take to improve cash flows from operations.

Fresh Catch Pte Ltd Statement of Cash Flows (Indirect Method) For Year Ended 31 December 2022 $ Cash flows from operating activities Profit before tax 249,375 Adjustments to reconcile profit to net cash provided by operating activities Depreciation expenses Increase in accounts receivable Decrease in accounts payable Increase in inventories Cash generated from operations Income tax paid Net cash provided by operating activities Cash flows from investing activities Cash paid for an auto-packaging system* Net cash used in investing activities Cash flows from financing activities Repayment of debt Net cash provided by financing activities Net decrease in cash Cash balance at 1 January 2022 Cash balance at 31 December 2022