QUESTION 1 (20 MARKS) REQUIRED Study the Statement of Cash Flows provided below and answer the following questions:

1.1 Calculate the depreciation for the year ended 31 December 2022. (2 marks)

1.2 Calculate the cash balance as at 31 December 2022 if there was a bank overdraft of R24 000 on 31 December 2021. State whether the balance is favourable or unfavourable. (2 marks)

1.3 Based on the cash flow information, how does the company appear to be performing? Explain by referring to FIVE (5) items on the statement. (10 marks)

1.4 The long-term loan was increased on 01 July 2022. Was it prudent for the company to have taken the loan? Explain. (2 marks)

1.5 Suggest FOUR (4) ways in which the company can improve its liquidity. (4 marks)

INFORMATION ASTON LTD STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022

R Cash flows from operating activities 624 000

Operating loss (516 000)

Adjustment:

Depreciation ?

Profit before working capital changes ?

Working capital changes: 960 000

Increase in inventory (480 000)

Increase in receivables (960 000)

Increase in payables 2 400 000

Cash generated from operations 924 000

Interest paid (300 000)

Cash flows from investing activities (1 200 000)

Acquisition of plant and equipment (1 200 000)

Cash flows from financing activities 720 000

Increase in long-term loan (interest rate 25% p.a.) 720 000

Net change in cash ?

Cash balance (31 December 2021) ?

Cash balance (31 December 2022) ?