PSA11.8 Here are the financial statements of Mountain King Tours Ltd Prepare a statement of cash lousdirect and indirect methods-and calculate MOUNTAIN KING TOURS LTD cash-basd ratios (LO3,5 Statement of financial position as at 31 December 2016 2016 2015 Assets Cash $ 30000 S 13000 Accounts receivable Inventory Equipment Less: Accumulated depreciation 18000 14000 34000 35000 S70000 (30000) S78000 40 000 (24000) 54000 $116000 Total $122 000 Liabilities and equity Accounts payable Income tax payable Debentures payable Share capital Retained earnings S 29 000 33000 20000 15000 15000 10000 30 000 25000 28000 33000 Total $122000 $116000 MOUNTAIN KING TOURS LTD Statement of profit or loss for the year ended 31 December 2016 Sales Cost of sales $250000 180000 Gross profit Selling expenses Administrative expenses 70000 $28000 16000 44000 Interest expense 2000 Profit before income tax Income tax expense 24000 7000 Profit $ 17000 Required (a) Prepare a statement of cash flows using the direct method for operating cash flows (b) Prepare a reconciliation of profit and cash provided by operations. (c) Calculate these cash-based measures: 1. Current cash debt coverage. 2. Cash return on sales ratio. 3. Cash debt coverage. 4. Free cash flow. (d) Discuss the cash adequacy of XYZ Children's Centre Ltd, as revealed by the ratios calculated in part (c)