Question 3 (32 marks)

The following information has been extracted from the draft financial statements of Hue, a limited liability company.

Statement of financial position as at 31 December

	20x9	20x8
	$'000	$'000
Non current assets	4,600	2,700
Current assets
Inventory	580	500
Trade receivable	360	330
Bank	-	70
	940	900
Total assets	5,540	3,600
Equity and liabilities
Equity
Ordinary share capital	3,500	2,370
Share premium	300	150
Retained earnings	1,052	470
	4,852	2,990
Current liabilities
Trade payable	508	465
Taxation	180	145
	688	610
Total equity and liabilities	5,540	3,600

Additional information

1. The statement of profit or loss for the year ended 31 December 20x9 shows the following:

	$'000
Operating profit	1,052
Interest expense	20
Profit before tax	1,032
Taxation	180
Profit for financial year	852

2. During the year, dividends paid were $270,000.
3. Depreciation expense on non-current assets were $700,000.
4. During the year, non-current assets with net book value of $200,000 were sold for $180,000

Required:

1. Prepare a statement of cash flows for Hue for the year ended 31 December 20x9, using the indirect method. (23.0 marks)
2. What are advantages of statement of cash flows? (9.0 marks)