Marwell plc reported a profit after tax of €14.04m for 20X2 as follows:

The statements of financial position and changes in equity showed:

(i) Inventories at the year-end were €5.94m higher than the previous year.

(ii) Trade receivables were €10.26m higher.

(iii) Trade payables were €4.86m lower.

(iv) Tax payable had increased by €2.7m.

(v) Dividends totalling €18.36m had been paid during the year.

Required:

(a) Calculate the net cash flow from operating activities.

(b) Explain why depreciation and a loss made on disposal of a non-current asset are both treated as a source of cash.

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€m €m Revenue 118.82 Materials 29.70 Wages Depreciation Loss on disposal of plant Profit on sale of buildings 30.80 22.68 3.78 (6.48) 80.48 Operating profit Interest payable 38.34 16.20 Profit before tax 22.14 Income tax expense 8.10 Profit after tax 14.04