The accountant of M. Albright, a sole trader in cotton materials, presents her annual balance sheets of the last two years as shown below.

(All amounts in )		2019		2020
Non-current assets		31,000		37,000
Accumulated depreciation		(3,000)		(3,400)
Current assets		28,000		33,600
Inventory	6,200		11,800
Trade accounts receivable	7,800		6,800
Bank	3,000	17,000	-	18,600
Total assets		45,000		52,200
Current liabilities Trade accounts payable	4,000		4,400
Bank overdraft Total liabilities	-	(4,000)	1,800	(6,200)
Net assets		41,000		46,000
Capital account Balance at 1/1		40,000		41,000
Net profit for the year		14,000		17,000
Additional capital introduced		-		4,000
Drawings	(13,000)		(16,000)
Total capital	41,000		46,000

The accountant is faced with the task of explaining Mrs. Albright why she has an overdraft, despite the fact that she made more profit than the year before and has brought in capital during the year. Use a maximum of 300 words excluding the calculations for part (a) of the answer.

1. Required:
2. a. Draw up a cash flow statement (indirect method, only operating section) to help the accountant in explaining to Mrs. Albright how his overdraft has come about.
3. 2. Explain how this company can apply the cash flow for cash management.
   3. Explain whether profit for the year is equivalent to cash and provide reasons for your answer.
   4. Comment on the financial health and advise to the management of the company.