Time left 2:10:46 Desaru Sdn Bhd reported a small net profit of RM33,000 for financial year ended for the year ended 31 December 2020, but it was experiencing a sharp declined in its cash position. At the beginning of year 2020, the company invested in a new plant to expand its operations. Unfortunately, Covid 19 pandemic has caused an unanticipated build-up of receivables and inventories. As a result, the company is facing working capital problems. The CEO has approached the company's banker for a loan arrangement to raise cash. The bank credit officer indicates that the company must be able to generate positive cash flows from operations to secure a further financing. The results of cash generated from operations as prepared by the accounts officer of the company show that Desaru Berhad reported a negative cash flows from operations during 2020. After analysing the balance of the accounts giventhe CEO came up with a plan to turnaround the company's cash flows. The plan is to sell the company's accounts receivable to factors and liquidate its raw materials inventories. These strategies would be able to generate lots of cash in the short term but could have unfavourable effects to the company. As the chief accountant of the company, advise the CEO about the issue of concerns about his plan. Required: (a) Compute the amount of cash flows generated from operations to prove that the company has a negative cash flows from operations. (8 marks) (b) Explain the ethical issues related to the CEO's idea. (4 marks) (c) Advise the CEO. (6 marks) Total: 18 marks Time left 2:10:46 Desaru Sdn Bhd reported a small net profit of RM33,000 for financial year ended for the year ended 31 December 2020, but it was experiencing a sharp declined in its cash position. At the beginning of year 2020, the company invested in a new plant to expand its operations. Unfortunately, Covid 19 pandemic has caused an unanticipated build-up of receivables and inventories. As a result, the company is facing working capital problems. The CEO has approached the company's banker for a loan arrangement to raise cash. The bank credit officer indicates that the company must be able to generate positive cash flows from operations to secure a further financing. The results of cash generated from operations as prepared by the accounts officer of the company show that Desaru Berhad reported a negative cash flows from operations during 2020. After analysing the balance of the accounts giventhe CEO came up with a plan to turnaround the company's cash flows. The plan is to sell the company's accounts receivable to factors and liquidate its raw materials inventories. These strategies would be able to generate lots of cash in the short term but could have unfavourable effects to the company. As the chief accountant of the company, advise the CEO about the issue of concerns about his plan. Required: (a) Compute the amount of cash flows generated from operations to prove that the company has a negative cash flows from operations. (8 marks) (b) Explain the ethical issues related to the CEO's idea. (4 marks) (c) Advise the CEO. (6 marks) Total: 18 marks