The Purple Lilac has providedthe following financial statementas at December 31, 2017

BALANCE SHEET 2016 2017

Non-Current Assets	Cost	Depn	NBV		Cost	Depn	NBV
Goodwill			280,000				220,000
Tangible Assets	1,700,000	(330,000)	1,370,000		2,000,000	(410,000)	1,590,000
Long term Investment			230,000				110,000
			1,880,000				1,920,000
Current Assets
Closing Stock		50,000				35,000
Debtors		35,000				45,000
Short term Investment		40,000				85,000
Bank		0				40,000
Cash		3,500	128,500			11,000	216,000
Total Assets			2,008,500				2,136,000
Capital & Reserves
Share Capital		670,000				845,000
General Reserves		210,000				210,000
Revaluation Reserves		40,000				135,000
Retained Profit		200,000	1,120,000			(115,000)	1,075,000
Non Current Liability
10% Debenture			650,000				850,000
Current Liabilities
Creditors		33,500				130,000
Dividends Payable		45000				15,000
Tax Payable		35,000				11,000
Interest Owing		40,000				55,000
Bank Overdraft		85,000	238,500			0	211,000
Total Equity & Liabilities			2,008,500				2,136,000

CONDENSED INCOMESTATEMENT 2017

PBIT			(230,000)
Less interest			(85,000)
Profit before tax			(315,000)
Less tax			0
PAT			(315,000)
Add Retained Earning b/d			200,000
Total Profit for the Year			(115,000)
Less Transfer to Reserves		0
Less Dividends		0	0
Retained Earning c/d			(115,000)

Note : During the yearnon-current asset costing $140,000 with a book valueor $110,000 was sold at a profit of $20,000

Required

1. Preparethe cash flow statement for 2017 ( 21 marks )

2. Useappropriate items in the cash flow statement to comment on

1. The state of liquidityin the company ( 2 marks )
2. The state ofprofitability in the company ( 2 marks)