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Question 3. The following are the summarised financial statements of Delta Clothing Ltd for the year 31st of December 2020. Profit before taxation (after interest) Depreciation (before tax) Interest receivable Interests payable At the beginning of the year: Inventories Trade receivables Trade payables Prepayments Accrued expenses At the end of the year: Inventories Trade receivables Trade payables Prepayments Accrued expenses 360,000,000 40,000,000 22,000,000 12,000,000 12,000,000 55,000,000 45,000,000 9,000,000 12,000,000 20,000,000 102,000,000 72,000,000 18,000,000 8,000,000 10,000,000 The following further payments made within the last financial year: Tax Paid Interest Paid Dividends Paid 4,000,000 7,000,000 3,000,000 a) Critically discuss with examples why investors might place particular emphasis on the cashflow statement when looking at a loss making unicorn scale-up company as a possible investment and discuss what insights a cashflow statement might offer as compared with the other financial statements. (8 marks) b) Critically discuss the three main sections of the cashflow statement and explain what insights they offer the end users of financial statements from an investors perspective with examples. (12 marks) c) Calculate both the cash generated from operations and net cash from operations for Delta Clothing Ltd.

The following are the summarised financial statements of Delta Clothing Ltd for the year 31st of December 2020. Profit before taxation (after interest) Depreciation (before tax) Interest receivable Interests payable 360,000,000 40,000,000 22,000,000 12,000,000 12,000,000 55,000,000 45,000,000 9,000,000 12,000,000 At the beginning of the year: Inventories Trade receivables Trade payables Prepayments Accrued expenses At the end of the year: Inventories Trade receivables Trade payables Prepayments Accrued expenses 20,000,000 102,000,000 72,000,000 18,000,000 8,000,000 The following further payments made within the last financial year: Tax Paid 4,000,000 Interest Paid 7,000,000 Dividends Paid 3,000,000 a) Critically discuss with examples why investors might place particular emphasis on the cashflow statement when looking at a loss making 'unicorn' scale-up company as a possible investment and discuss what insights a cashflow statement might offer as compared with the other financial statements. (8 marks) b) Critically discuss the three main sections of the cashflow statement and explain what insights they offer the end users of financial statements from an investor's perspective with examples. (12 marks) c) Calculate both the cash generated from operations and net cash from operations for Delta Clothing Ltd. (10 marks)

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