The following shows After Hours Plumbing Services Pty Ltds Statement of Cash Flows at the end of their third year of operations.

Required

1. What is the purpose of a statement of cash flows? (1 mark)

2. How does the cash flow statement assist a user trying to determine whether to invest in the business? (1 mark)

3. Review each section of the Statement of cash flows above and discuss how the business is performing in each area. (3 marks)

4. Review the overall cash flow position of the company and then justify why you would, or would not, consider working for the company. (1 mark)

1,614,375 (1,425,375) Statement of cash flows Cash flows from operating activities Receipts from customers Payments to suppliers and employees Dividends received Interest paid Income taxes paid Net cash provided from operating activities (63,750) (48,750) 76,500 Cash from investing activities Payments for property, plant and equipment Proceeds from sale of property, plant and equipment Net cash from investing activities (626,250) 187,500 (438,750) Cash from financing activities Proceeds from issue shares Proceeds from borrowings Repayment of borrowings Distributions paid Net cash flow from financing activities Net increase/decrease in cash for the year Cash at beginning of the financial year Cash at the end of the financial year 363,750 206,250 (138,750) (165,000) 266,250 (96,000) 75,000 (21,000)