Subject name: Financial Management

Question 3 ( 20 marks) The company has made a profit of R13,587 in the year 31st August 2012, yet has generated an operating cash OUTFLOW of R109,690. a) Explain, using both facts and figures, how African Lean Consulting has made a profit yet has suffered a significant negative operating cashflow. (10 marks) b) Evaluate the significance of the cashflow statement when making credit decisions. (6 marks) c) If the adjustment outlined in the auditor's opinion was put in place what effect would this have on the Profit and Loss Account and on the Cashflow Statement. (ignore any tax effect). (4 marks)