Question
Study the statement of cash flows of Mustang Limited given below and answer the following questions: 1.1 Calculate the cash balance as at the beginning
Study the statement of cash flows of Mustang Limited given below and answer the following questions:
1.1 Calculate the cash balance as at the beginning of the year and state whether the balance is favourable or unfavourable. | (2 marks) |
1.2 Calculate the amount of interest paid for the year ended 31 December 2020. | (2 marks) |
1.3 Identify one item from the statement of cash flows below that increases cash flow but not profit. | (2 marks) |
1.4 Explain why depreciation is added to the operating profit. 1.5 Comment on the following cash flows of Mustang Limited: | (2 marks) |
1.5.1 Cash flows from operating activities R292 000 | (3 marks) |
1.5.2 Increase in receivables (R76 000) | (3 marks) |
1.5.3 Cash flows from investing activities (R448 000) | (3 marks) |
1.5.4 Cash flows from financing activities (R160 000) | (3 marks) |
INFORMATION
MUSTANG LIMITED |
| |
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020 |
| |
| R | |
Cash flows from operating activities | 292 000 | |
Profit before interest and tax/Operating profit | 512 000 | |
Depreciation | 128 000
| |
Profit before working capital changes Working capital changes Decrease in inventory Increase in receivables | 640 000 (100 000) | |
8 000 (76 000) |
| |
Decrease in payables Cash generated from operations Interest paid Dividends paid Income tax paid Cash flows from investing activities Non-current assets purchased Increase in investments Cash flows from financing activities Increase in long-term borrowings Net increase in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year | (32 000) |
|
540 000 ? (120 000) (96 000)
(448 000)
160 000
4 000 ?
36 000 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started