HealthCare Innovations is preparing its cash flow statement for the year ending December 31, 20X1. The company had the following cash transactions:

• January 1: Collected $300,000 from customers.
• March 31: Paid $150,000 to suppliers for inventory purchases.
• June 30: Paid $75,000 for operating expenses.
• September 30: Received $100,000 in cash dividends from investments.
• December 31: Paid $50,000 in income taxes.

Required:

1. Prepare the cash flow statement for the year ending December 31, 20X1, using the direct method.
2. Calculate the net cash provided by operating activities.
3. Discuss the impact of the cash flow from operating activities on the company’s liquidity.
4. Explain how the direct method differs from the indirect method in preparing the cash flow statement.