Star Limited is a public company listed in Hong Kong. It engages in trading fashion products. Below are the most recent financial statements for Star Limited.

Additional information:

i) There were no disposals of non-current assets during the year ended 31 March 2021. However, Star Limited classified some non-current assets as held for sale at 31 March 2021.

ii) The depreciation expense of property, plant and equipment for the year ended 31 March 2021 was $640,000.

Required:

a) Prepare a statement of cash flows for Star Limited for the year ended 31 March 2021, in accordance with HKAS 7 Statement of cash flows, using the indirect method.

b) Using the information in the question and your answer to (a) above, comment on the performance, financial position and cash flows position of Star Limited for the year ended 31 March 2021. Support your arguments with the calculation of appropriate ratios.

Statement of financial position as at 31 March: 2021 $'000 2020 $'000 Non-current assets Property, plant and equipment Intangible assets 5,400 9,500 6,200 Current assets Inventory Accounts receivable Bank Non-current assets held for sale 3,600 2,400 1,800 1,400 4,000 2,000 Total assets 23,700 12,600 Equity and liabilities Equity Share capital Retained earnings 5,000 4,500 5,000 2,250 Non-current liabilities 10% bank loan 16% bank loan 2,000 2,000 7,000 Current liabilities Bank overdraft Accounts payable Current tax payable 200 2,800 2,200 2,150 1,200 Total equity and liabilities 23,700 12,600 Statement of profit or loss and other comprehensive income for the year ended 31 March: 2021 2020 $'000 $'000 Revenue 25,500 17,250 Cost of goods sold (14,800) (10,350) Gross profit 10,700 6,900 Distribution expenses (2,700) (1,850) Administrative expenses (2,100) (1,450) Interest expense (650) (100) Profit before tax 5,250 3,500 Income tax expense (2,250) (1,000) Profit for the year 3,000 2,500