Study the statement of cash flows of Mustang Limited given below and answer the following questions:Calculate the cash balance as at the beginning of the year and state whether the balance is favourable or unfavourable. (2 marks)

1.1Calculate the amount of interest paid for the year ended 31 December 2020. (2 marks)

1.2Identify one item from the statement of cash flows below that increases cash flow but not profit. (2 marks)

1.3Explain why depreciation is added to the operating profit. (2 marks)

1.4Comment on the following cash flows of Mustang Limited:

1.5 Cash flows from operating activities R292 000 (3 marks)

1.5.1 Increase in receivables (R76 000) (3 marks)

1.5.2 Cash flows from investing activities (R448 000) (3 marks)

1.5.3 Cash flows from financing activities (R160 000) (3 marks)

INFORMATIONMUSTANG LIMITED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020RCash flows from operating activities 292 000Profit before interest and tax/Operating profit 512 000Depreciation 128 000Profit before working capital changes Working capital changes640 000(100 000)Decrease in inventory Increase in receivables8 000(76 000)1.5.4Decrease in payables (32 000)Cash generated from operations 540 000Interest paid ?Dividends paid (120 000)Income tax paid (96 000)Cash flows from investing activities (448 000)Non-current assets purchased Increase in investments(328 000)(120 000)Cash flows from financing activities 160 000Increase in long-term borrowings 160 000Net increase in cash and cash equivalents 4 000Cash and cash equivalents at beginning of the year ?Cash and cash equivalents at end of the year 36 000

Answer rating: 100% (QA)

11 During the year cash cash equivalent have increased by R 4000 It is known that beginning cash cash equivalent increase in cash cash equivalent during the year ending cash cash equivalent Substituti... View the full answer