Cloud Ltd s Income Statement for the year ended 31st Dec 2020 and the Statement of Financial Position as at 31st December 2020 and 2019 are as follows:

Income Statement for the year ended 31^st Dec 2020

	$ Million
Sales	864
Cost of sales	(342)
Gross profit	522
Distribution expenses	(40.5)
Administrative expenses (it included depreciation of $118.5m)	(157.5)
Operating profit	324
Interest payable	(34.5)
Profit before taxation	289.5
Taxation	(69)
Profit for the year	220.5

Statement of financial position as at 31^st December 2020 and 2019

	2020	2019
	$ Million	$ Million
Non-current assets
Plant, plant, and Equipment	697	673
Current assets
Inventories	61.5	66
Trade receivables	208.5	181.5
Cash at bank	102.5	50
Total assets	1,069.5	970.5
Equity and liabilities
Share capital	360	225
Retained earnings	184.5	39
Non- Current liabilities
Loan	375	600
Current liabilities
Trade payables	81	82.5
Taxation	69	24
Total Equity and Liabilities	1069.5	970.5

During 2020, Company purchased some plant and machinery but there were no disposal of Non-Current assets. A dividend of RO 75 million was paid on ordinary shares during the year. The interest paid during the year is equal to the payable expenses shown in the Income statement.

1. Prepare a cash flow statement of Cloud Ltd for the year ended 31^st Dec 2020 (show all your workings). (20 Marks)
2. Discuss the crucial importance of preparing cash flow statement. (5 Marks)