Question 2 Consider the following income statement for the year ended on 31/12/2021 (all data expressed in £): sales rev

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Question 2 Consider The Following Income Statement For The Year Ended On 31 12 2021 All Data Expressed In Sales Rev 1 (125.99 KiB) Viewed 59 times

Question 2 Consider the following income statement for the year ended on 31/12/2021 (all data expressed in £): sales revenue 154,300 cost of sales -73,600 gross profit 80,700 wages -23,560 administrative expenses -9,560 rent expenses -12,000 change in warranties provision -2,000 depreciation -20,000 operating profits 13,580 interest expenses -1,260 pre-tax profits 12,320 taxes (20%) -2,464 profits for the year 9,856
And the following balance sheets for the same company: 31/12/2021 160,000 95,000 65,000 31/12/2020 130,000 75,000 55,000 5,670 34,500 4,000 15,746 12,340 23,670 0 24,050 PPE at cost accumulated depreciation PPE current assets: inventories receivables prepaid rent cash current liabilities: warranties provision payables non-current liabilities: bank loan 10% bond equity: share capital retained profits 5,500 42,000 3,500 45,600 5,000 10,000 2,400 10,000 30,000 32,416 30,000 23,560
During 2021, the company paid dividends for £ 1,000 to shareholders. Taxes are paid in full on the last day of December. a) Prepare the cash flows statement for the year ended on 31/12/2021. What have been the main uses and sources of cash for the company during the year? [25 marks] b) Comment on the solvency and liquidity of the company using the ratios that you consider most appropriate. How have solvency and liquidity evolved in 2021? [10 marks]