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B/S Cash Short-term investment AR Inventory Prepaid expenses PPE Accumulated depreciation Total Dec. 31 2019 $ 9,780 12,800 7,580 12,250 1,840 27,000 (5,000) $66,250 Dec. 31 2018 $ 4,840 11,400 4,300 9,285 2,600 24,250 (5,200) $51,475 Accrued liabilities Bank loan payable Common shares RE Total $ 9,300 1,150 11,000 20,000 24,800 $66,250 $ 7,730 700 15,000 17,500 10,545 $51,475 3 I/S for 2019 Sales CGS Gross profit Operating expenses Operating income (EBIT) Other revenues and expenses: Unrealized gain on ST-investment $1,400 Interest expense (473) $49,278 18,546 30,732 11,641 19,091 927 Unrealized gain on ST-investment $1,400 Interest expense (473) Income before tax Tax expense 927 20,018 4.500 $15,518 NI Additional information: Prepaid expenses and accrued liabilities relate to operating expenses. An unrealized gain on ST-investment of $1,400 was recorded. A/P relates to purchases of inventory. Operating expenses include $4,650 of depreciation expense and a $750 loss on disposal of equipment Required: a. (1) Prepare cash flows from operations, CFO using the INDIRECT method. (9 marks) (ii) Calculate the cash paid for operating expenses. (6 marks) b. (10 marks) Complete the table below. 2019 2018 + OL NOA + Calculate FCF = NOPAT - Change in NOA

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