TWO The summarised statement of profit or loss for the year to 31 October 2018 and the statement of financial position as at that date, with comparative figures for 2017, for Radox Plc are shown below: Statement of Profit or Loss (Summarised) for the year to 31 October: Sales revenue Cost of sales Gross profit Operating costs Profit before interest and taxation 2018 2017 K' 000 K' 000 7,558 6, 104 3,741 2,987 3,817 3, 117 3,011 2,419 806 698 Dividends received 52 45 858 743 Interest payable 16 4 Profit before taxation 842 739 Taxation 184 155 Profit for the year 658 584 Statement of Financial Position as at 31 October 2018 2018 2017 Non-current assets Plant and machinery At cost 6,158 4,996 Depreciation to date 3,209 2,949 2,852 2144 Long term investments 1,600 1,200 4,549 3,344 Current assets Inventory 315 327 Trade receivables 657 598 Bank 0 241 Bank 0 241 972 1,166 5.521 4,510 Equity Share capital 1,200 1,100 Share premium 1,600 1,400 Revaluation reserve 90 Retained earnings 1,628 1,220 4,518 3,720 Current liabilities Trade payables 659 618 Tax payable 191 172 Bank overdraft 153 0 1,003 790 5,521 4,510 The directors of Radox Plc are pleased with the profit for the year to 31 October 2018, but are concerned at the deteriorating liquidity position of the company. To address this concern they are considering various options to improve the liquidity, including the raising of funds through a rights issue to existing shareholders and the issuing of loan capital. The following information is also available: 1. Dividends of K250, 000 were paid during the year to 31 October 2018. 2. Plant and equipment with an original cost of K720, 000 and accumulated depreciation of K540, 000 were sold during the year for K210, 000. The revaluation reserve relates to revaluation of property plant and equipment. 3. Long term investments relate to shares purchased in a manufacturing company. Required (a) Prepare a statement of cash flows for Radox Plc for the year to 31 October 2018 using the indirect method. 10 Marks (b) Analyse the statement of cash flows for the year to 31 October 2018 15 Marks