Question Your uncle who is a shareholder of Sweet & Sour Ltd has just shown you the company's latest statement of cash flows.

He is concerned that the company's cash balance has decreased from $326,000 at 31 December 2020 to $55,000 at 31 December 2021. You have also established from the company's statement of financial position that its total assets were $2,878,000 as at 31 December 2021.

Required: Examine the statement of cash flows, do you think your uncle's concern is justified? Comment and explain.