QUESTION 1 (20 Marks)

REQUIRED

Study the statement of cash flows given below and answer the following questions:

1.1 Calculate the following:

1.1.1 Dividends paid (2 marks)

1.1.2 Carrying value (Book value) of the equipment sold (2 marks)

1.1.3 Cash and cash equivalents at the end of year (2 marks)

1.2 Identify TWO (2) items from this statement of cash flows that improve cash flow but do not increase profit. (2 marks)

1.3 Explain why depreciation is added to operating profit in computing the cash flow from operating activities. (2 marks)

1.4 There is a combination of a positive cash flow from operating activities of R1 504 000 and a negative cash flow from investing activities of R8 384 000. Is this favourable for Sinclair Ltd? Provide THREE (3) reasons for your answer. (6 marks)

1.5 Comment on the following:

1.5.1 Decrease in inventory, R264 000 (2 marks)

1.5.2 Increase in receivables, (R3 712 000) (2 marks)

INFORMATION

SINCLAIR LTD

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021