QUESTION 1 Study the statement of cash flows of Mustang Limited given below and answer the following questions: Calculate the cash balance as at the beginning of the year and state whether the balance is favourable or unfavourable. 1.1 (2 marks) 1.2 Calculate the amount of interest paid for the year ended 31 December 2020. (2 marks) 1.3 Identify one item from the statement of cash flows below that increases cash flow but not profit. (2 marks) 1.4 Explain why depreciation is added to the operating profit. (2 marks) 1.5 Comment on the following cash flows of Mustang Limited: 1.5.1 Cash flows from operating activities R292 000 (3 marks) 1.5.2 Increase in receivables (R76 000) (3 marks) 1.5.3 Cash flows from investing activities (R448 000) (3 marks) Cash flows from financing activities (R160 000) (3 marks) INFORMATION MUSTANG LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020 R Cash flows from operating activities 292 000 Profit before interest and tax/Operating profit 512 000 Depreciation 128 000 Profit before working capital changes Working capital changes 640 000 (100 000) Decrease in inventory Increase in receivables 8 000 (76 000) 1.5.4 Decrease in payables (32 000) Cash generated from operations 540 000 Interest paid ? Dividends paid (120 000) Income tax paid (96 000) Cash flows from investing activities (448 000) Non-current assets purchased Increase in investments (328 000) (120 000) Cash flows from financing activities 160 000 Increase in long-term borrowings 160 000 Net increase in cash and cash equivalents 4 000 Cash and cash equivalents at beginning of the year ? Cash and cash equivalents at end of the year 36 000