QUESTION 1

You are expected to demonstrate your knowledge on all aspect around the Cash Flow Statement and interoperation thereof.

INFORMATION:

The directors of Nero Limited realized that the company could have cash flow challenges in the next financial year.

A. Extract from the income Statement for the year ended 28 February 2018:

	28 February 2018
Sales	3 201 600
Cost of Sales	1 280 640
Gross Profit	1 920 960
Depreciation	?
Interest on Loan	164 700
Income tax	99 760
Net income before tax	?
Net Profit after tax	312 000
Dividends ( interim and declared at the end of the year)	288 000

C. Extract from the Balance Sheet as at 28 February 2018

	28 February 2018	28 February 2017
Tangible/ Fixed assets	2 568 816	2 091 000
Fixed Deposit	150 000	80 000
Current Assets	708 624	615 000
Inventories	404 928	369 000
Trade and other receivable	275 496	198 168
Cash and cash equivalents	28 200	47 832
Shareholders equity	2 130 000	1 640 000
Ordinary share capital	1 986 000	1 520 000
Retained income	144 000	120 000
Non-current liabilities	960 000	900 000
Current liabilities	337 440	246 000
Trade and other payables	150 000	126 240
Shareholders for dividends	180 000	115 200
SARS: Income tax	7 440 cr	4 560 cr

D. Note to the Balance Sheet: TANGIBLE ASSETS

Required

1. Use the following information to: 1.1 Prepare the Cash Flow Statement for the year ended 28 February 2018 (16) 1.2 Prepare the Note in respect of CASH GENERATED FROM OPERATIONS (17) 1.3 Show calculation of Dividends Paid (4) 1.4 Show calculation of Taxation Paid (4) 1.5 Calculate the purchase of tangible assets (9)