The cash flow statement for Rajkot Ltd is provided below: Rajkot Ltd Cash flow statement for the year ended 31 December 2016 R Cash flow from operating activities 390 000 Operating loss (210 000) Adjustment Depreciation 200 000 Profit before working capital changes (10 000) Working capital changes 400 000 Increase in inventory (200 000) Increase in receivables (400 000) Increase in payables 1 000 000 Cash flow from investing activities (400 000) Acquisition of plant and equipment (400 000) Cash flow from financing activities 300 000 Increase in long-term loan (interest rate 16% p.a.) 300 000 Net increase in cash 290 000 Cash balance (31 December 2015) ? Cash balance (31 December 2016) ? Required: Study the above cash flow statement and answer the questions that follow: 1.1 Explain why depreciation was included in computing the cash flow from operating activities. (2 marks) 1.2 Calculate the cash balance on 31 December 2015 if there was a bank overdraft of R35 000 on 31 December 2016. (3 marks) 1.3 Based on your study and analysis of the cash flow statement of Rajkot Ltd, discuss in detail how the company appears to be performing. (8 marks) 1.4 The long term loan was increased on 01 July 2016. Explain whether it was prudent for the company to have taken the loan. (3 marks) 1.5 Suggest four ways in which the company can improve its liquidity. (4 marks)