QUESTION SEVEN [30 MARKS] Comprehensively analyse the below Cash Flow Statement in terms of the Operating, Financing and Investing Activities, with particular focus on the Management of the company's Working Capital (Inventory, Receivables and Payables). In your analysis, include recommendations on how the company can improve their Working Capital Management (30 marks) CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2018 R 204 160 284 800 30 000 30 000 314 800 114 000 Cash flows from operating activities Profit before interest and tax/Operating profit Adjustments to convert to cash from operations Non-cash flow adjustments Add: Depreciation Profit before working capital changes Working capital changes Decrease in inventory (250 000 - 120 000) Decrease in receivables (64 000 - 40 000) Decrease in payables (138 000 - 98 000) Cash generated from operations Interest paid Dividends paid (56 000 + 133 000 - 76 000) Income tax paid (6 000 + 90 240 - 8 600) 130 000 24 000 (40 000) 428 800 (24 000) (113 000) (87 640) Cash flow from investing activities Non-current assets purchased (2 444 000 - 144 000 - 30 000 - 2464 160) Proceeds from sale of fixed assets (50 160) (194 160) 144 000 Cash flow from financing activities Proceeds from issue of ordinary shares (300 000 + 120 000) Decrease in long-term borrowings (600 000 - 200 000) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 20 000 420 000 (400 000) 174 000 22 000 196 000 7 Page Working Capital Management (Mock Exam 2020)