The statement of financial position of C.F. Ltd for the year ended 31 December 20X2, together with comparative figures for the previous year, is shown below.

Additional information
1. There were no sales of non-current assets during 20X2.
2. The company declared a final dividend of £26,000 for 20X2 (20X1 − £28,000). This is paid immediately after the AGM that takes place two months after the year end. The company does not pay any interim dividends.
3. New debentures and shares issued in 20X2 were issued on 1 January.
4. Property, plant and equipment is made up of the following:
_____________________20X220X1
Equipment...................270..........180
Provision for depreciation (90)..........(56)
..................................180..........124
Required
a. Show your calculation of the operating profit of C.F. plc for the year ended 31 December 20X2.
b. Prepare a statement of cash flows for the year, in accordance with IAS 7 Statement of Cash Flows.
c. State the headings of any other notes that you would be required to include in practice under IAS 7.
d. Comment on the implications of the information given in the question, plus the statements you have prepared, regarding the financial position of the company.
e. IAS 7 supports the use of the indirect method of arriving at the net cash inflow from operating activities, which is the method you have used to answer part (b) of this question. What is the direct method of arriving at the net cash inflow from operations? State, with reasons, whether you agree with the IAS 7 acceptance of the indirect method.

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20X2 £ 000 180 20X1 ASSETS Non-current assets Property, plant and equipment (note 4) Current assets Inventory Trade receivables £'000 124 50 as 90 270 86 210 Total assets EQUITY AND LIABILITIES Equity Equity share copital £1 shares Share premium Retained earnings Total equity Non-current liabilities 15% debentures, repayable 20x6 Total non-current liabilities Current liabilities Trade and operating payables Current tax payable Bank overdroft Total current liabilities Total liabilities 25 10 93 128 20 81 109 80 80 60 60 24 19 62 142 270 41 101 210 Total equity and liabilities