The following information is available for Carmen Limited.

The balance in the bank account of the business at 1 July 2016 was £30,000.

During the 12 months that followed the following transactions took place:

● New shares were issued by the company which raised an additional £10,000.

● Inventory was bought for £2,000.

● A loan of £13,000 was taken out from a lender.

● Interest expense of £1,000 was paid on the loan.

● A motor vehicle was purchased for £6,000.

● £5,000 was paid for various administrative expenses.

● £4,000 was paid to the tax authorities to settle last year’s tax liability.

● The inventory was sold for £17,000.

● £1,000 of interest income was received on cash balances.

● Part of the loan was repaid: £9,000.

● A plot of land was purchased on credit from Summer Ltd and will be paid for in January 2018.

● £8,000 of dividends we paid to shareholders.

Required:

(a) Prepare a statement of cash flows for Carmen Limited for the year ended 30 June 2017, including the reconciliation between opening and closing bank balance. 

(b) Outline what it tells the managers of Carmen Limited.