Professional Documents
Culture Documents
Fund flows
Fund flows
funds flows
Fixed assets
NOTE: 1. 2. 3. 4. Increase in current asset will lead to increase in working capital. Decrease in current asset will lead to decrease in working capital. Increase in current liability will lead to decrease in working capital. Decrease in current liability will lead to increase in working capital.
FUND FLOW STATEMENT (FFS) Fund flow statement is a statement prepared to indicate the increase in cash resources and the utilization of such resources of business during the accounting period.
OBJECTIVES OF FUND FLOW STATEMENT 1. To provide information regarding financing and investing activities of the business. 2. To disclose the changes in the working capital between two periods. 3. To disclose the sources of fund which have been procured during a period. 4. To disclose the uses/applications of fund on which the sources of fund have been put.
1. 2. 3. 4. 5. 6. 7.
Analysis of financial position. Determination of financial consequences of business activities. Comparative study of financial statements. Helpful in securing bank loans. Helpful in allocation of resources. Planning for working capital. Helpful in managerial decisions.
CASH FLOW STATEMENT It is the cash and cash equivalents are the basis of cash flow statement. It is statement which indicates the changes of cash during an accounting period. It is all about the inflows and outflows of cash during the year.
OBJECTIVES AND IMPORTANCE OF CFS 1. 2. 3. 4. 5. 6. 7. 8. Knowledge of cash position. Knowledge of cash inflow and cash requirements. Knowledge of short-term solvency. Help in framing the financial policies. Helpful in dividend policy. Helpful in cash budget. Useful for external investors. Study of sources and uses of cash various activities.
LIMITATIONS OF CFS 1. 2. 3. 4. 5. Accrual concept of accounting is ignored. It is not a complete substitute of income statement. It is not a substitute of fund flow statement. Non-cash transactions are ignored in CFS. CFS presents the misleading comparision. CLASSFICATION OF CASH FLOW 1. Cash flow from operating activities.
CASH FLOWS
CASH INFLOWS
CASH OUTFLOWS
Receipts from royalties fees commission & others
Cash sales
Refund of tax
Cash purchases
Payment or salaries
Payment of tax
Payments of contracts
Payments of creditors
Cash inflows
Cash outflows
Payment to future
CASH FLOWS
Cash inflows
Cash outflows
Issue of shares
Issue of debentures
Repayment of loan
Payment of interest