Study the statement of cash flows given below and answer the following questions:

1.1Calculate the following:

1.1.1Dividends paid

1.1.2Carrying value (Book value) of the equipment sold

1.1.3Cash and cash equivalents at the end of year

1.2Identify TWO (2) items from this statement of cash flows that improve cash flow but do not increase profit.

1.3Explain why depreciation is added to operating profit in computing the cash flow from operating activities.

1.4There is a combination of a positive cash flow from operating activities of R1 504 000 and a negative cash flow from investing activities of R8 384 000. Is this favourable for Sinclair Ltd? Provide THREE (3) reasons for your answer.

1.5Comment on the following:

1.5.1Decrease in inventory, R264 000

1.5.2Increase in receivables, (R3 712 000)

INFORMATION SINCLAIR LTD

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2021

Cash flows from operating activities R1 504 000

Profit before interest and tax/Operating profit R 10 136 000

Adjustments to convert to cash from operations ?

Non-cash flow adjustments R 6 176 000

Depreciation R6 000 000

Loss on disposal of equipment R176 000

Profit before working capital changes R16 312 000

Working capital changes (4 112 000)

Decrease in inventory R264 000

Increase in receivables (3 712 000)

Decrease in payables (664 000)

Cash generated from operations R12 200 000

Interest paid (3 744 000)

Dividends paid ?

Income tax paid (2 880 000)

Cash flows from investing activities (8 384 000)

Non-current assets purchased (10 576 000)

Proceeds from sale of equipment 2 192 000

Cash flows from financing activities 8 640 000

Proceeds from issue of ordinary shares 2 880 000

Increase in long-term borrowings 5 760 000

Net increase in cash and cash equivalents ?

Cash and cash equivalents at beginning of year 1 440 000

Cash and cash equivalents at the end of year ?