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The financial statements of Trip Ltd at 31 December were as follows. Statement of financial position at 31 December 2018 2019 000 000 000 000
The financial statements of Trip Ltd at 31 December were as follows. Statement of financial position at 31 December 2018 2019 000 000 000 000 Non-current assets Property, plant and equipment 24,000 30,750 Current assets Inventories 13,000 18,000 Receivables 2,700 9,950 Cash 1,300 0 17,000 27,950 Current liabilities Trade payables -23,000 -20,000 Bank overdraft 0 -11,000 Accrual on interest -200 -700 Tax -1,000 -1,800 -24,200 -33,500 Non-current liabilities Long term bank loan -10,000 -6,000 6,800 19,200 Equity 1 ordinary shares 3,000 3,000 Share premium 0 0 Reserves 3,800 16,200 6,800 19,200 Profit or Loss (extracts) 2018 2019 000 000 Operating profit 5,900 15,400 Interest receivable 0 0 Interest payable -1,400 -1,000 Profit before tax 4,500 14,400 Tax -1,500 -2,000 Profit after tax 3,000 12,400 Dividends 0 Retained profit 3,000 12,400 (1) Machinery with a net book value of 250,000 was sold at the beginning of 2019 for 350,000. (2) No dividends have been declared or paid in recent years. (4) The depreciation charge for the year ended 31 December 2019 was 4,000,000. Required (a) Prepare a statement of cash flows for the year ended 31 December 2019. (70 marks) (b) Using the statement of cash flows prepared in respect of (a) above, prepare briefing notes explaining why cash has decreased despite Trip Ltd making a profit. (30 marks)
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