Wakanda Fashion Enterprise is a designer fashion store. The income statement for the year ending 31 December 2020 is as follows:

Wakanda Fashion Enterprise

Income Statement for the year ended 31 December 2020

	RM	RM
Revenue		686,004
COST OF SALES:
Opening inventory	75,550
(+) Purchases	461,473
	537,023
(-) Closing inventory	(78,772)	(458,251)
GROSS PROFIT		227,753
Expenses excluding depreciation	143,270
Depreciation	21,420	(164,690)
OPERATING PROFIT		63,063
Interest paid		(1,857)
PROFIT FOR THE YEAR		61,206

Wakanda Fashion Enterprise

Statement of Financial Position as at 31 December

	2020		2019
	RM	RM	RM	RM
ASSETS
Non-current asset		118,180		139,600
Current assets
Inventory	78,772		75,550
Trade receivables & prepayments	7,255		5,250
Cash at bank	2,806		-
		88,833		80,800
		207,013		220,400
CAPITAL & LIABILITIES
Capital
Opening capital		80,179		88,639
Profit for the year		61,206		28,740
Drawings		(36,800)		(37,200)
		104,585		80,179
Non-current liabilities
Long-term loan		20,000		40,000
Current liabilities
Bank overdraft	-		7,481
Trade payables & accruals	82,428		92,740
		82,428		100,221
		207,013		220,400

During the year ending at 31 December 2020 Wakanda Fashion Enterprise has not bought or sold any non-current assets.

You are required to:

1. Prepare a Statement of Cash Flows for Wakanda Fashion Enterprise for the year ending 31 December 2020. (15 marks)

2. Briefly comment on the state of the business as revealed by the income statement, statements of financial position, and statement of cash flows. (5 marks)