Fund Flow

FUNDS : WORKING CAPITAL
FLOW OF FUNDS: THE TERM FLOW MEANS

CHANGE AND THEREFORE THE TERM FLOW OF
FUNDS MEANS CHANGES IN FUNDS OR
CHANGES IN WORKING CAPITAL. IN OTHER
WORDS, ANY INCREASE OR DECREASE IN
WORKING CAPITAL MEANS FLOW OF FUNDS.
FUNDS FLOW STATEMENT
Funds flow statements is dealt by Accounting Standard 7 .

.
Meaning :- It explains changes in funds or changes in working capital
. It explains the working capital position of the company which gives
an idea to the top management about the liquidity position of the
company.
Working capital:- It is the difference between current assets and

current liabilities.
Steps in preparation of funds flow statement:-
1. Preparation of working capital statement that explains increase or

decrease in working capital.
2. preparation of funds from operation statement in which we find
out operating profit.
3. Preparation of funds flow statement that shows various sources
and application of fund .
Current assets
Cash in hand and bank Fixed assets
Marketable investments Goodwill
Accounts receivables Land and building
Stock Plant and machinery
Prepaid exp. Long term investment
Fixed liabilities
Current liabilities Share capital
Bank overdraft Reserve and surplus
Outstanding expenses Debentures
Accounts payable Long term loans
Flow in fund Not flow in funds

USES OF FUNDS FLOW
WHY THE LIQUED POSITION OF THE BUSINESS
BECOMING MORE AND MORE UNBALANCED IN
SPITE OF COMPANY IS MAKING MORE AND MORE
PROFITS.
WHERE HAVE THE PROFIT GONE
WHAT WILL BE THE SOURCES FOR DIVIDEND IF
COMPANY IS NOT EARNING SUFFICIENT PROFIT
WHAT ARE THE SOURCES OF REPAYMENT OF THE
LOAN TAKEN
HOW MUCH FUNDS GENERATION THROUGH
NORMAL BUSINESS OPERATION.
IN WHAT WAY THE MANAGEMENT HAS UTILIZED
THE FUNDS IN THE PAST AND WHAT ARE GOING
TO BE LIKELY USES OF FUNDS ?
Funds flow Analysis
This statement is based on the working Capital concept of

funds.
It measures the inflows and outflows of working capital

resulting from different transactions.
Funds flow statement measures and presents in an analytical

manner the summarized version of the numerous flows of funds
for a specific period.
Funds Flow is the change in Working Capital

Schedule Of Changes In Working Capital
Current assets 2004 2005 Increase Decrease

Cash & bank bal. 593.61 555.36 38.25
Investments 3404.4 2917.5 486.95
Loans & adv. 9836.5 6696.6 3139.9
Bills receivables 1522.9 302.3 1220.6
Total 15357 10472
Current liabilities
Other liabilities 1767.5 576.72 1190.75
Short term borrowings 1881 1236 645.02
Bills for collections 4522.2 4477.4 44.85
Total 8170.7 6290.1
CA - CL 7186.7 4181.7
Increase In Working Capital 3005 3005.02

TOTAL 7186.7 7186.7 4885.6 4885.64
CALCULATION OF FUNDS
FROM OPERATION
Closing Balance Of P&L A/c 343.31
(+) Non Fund Items

Depreciation On Fixed Assets 2.56
Transfer Of R/S 195.23 197.79
541.1
(-) NON FUND CR.

NIL
OPENING BAL. OF P&L A/C 321.03
FUNDS FROM OPERATION 220.07

Funds Flow Statement
SOURCES AMT. APPLICATION AMT.
ISSUE OF CAPITAL 49 Increase In WC 3005.02
FUNDS FROM OPERATION 220.07 Investments 486
SALE OF FIXED ASSET 2.56
LONG TERM LOANS 2253.02
BORROWINGS 966.37
TOTAL 3491.02 3491.02

Cash Flow Statement
MEANING:- It is the statement depicting change in cash
possession from one period to another. It explains the reasons for
inflows or out flows of cash.
Steps in prepration
Statement of cash from operation in this we will find out the
cash profit of the company
Preparation of cash flow statement in which we will explain
various in flows and out flows of cash. Here we will take the
opening cash balance of the company and add various
inflows to it and deduct various outflows. Finally we will get
the closing cash balance of the company.
Uses of Cash Flow Statement:
Helps in efficient cash management

Helps in Internal Financial Management
Discloses the movement of cash
Discloses success or failure of cash planning.
Cash Flow Analysis
Cash flow includes cash inflows and outflows
cash receipts and cash payments during a period.
A cash flow statement is a statement which portrays

the changes in cash position between two
accounting periods.
It helps in taking short term financial decisions and

also in the preparation of cash budget for the next
year.
How Cash Flow Differ From
funds Flow ?
Unlike funds flow Cash Flow does
not has non-cash items.
It comprises only those entries in
which cash has come in or gone out.
Statement Of Cash From Operations
Net Profit Before Tax 330.22

(Add) Non-cash Expenses
Depreciation 35.15
Interest Payable 12.52
Amortizations 33.86
Provisions 80.80
(Less) Non-cash Incomes
Profit on sold Assets 43.19
Cash From Operations 449.36

Cash Flow Statement
Inflow Of Cash Outflow Of Cash
Opening Cash Balance 555.36 Advances 3180.69
Trade Payables 1119.70 Direct Taxes Paid 137.00
Deposits 1220.34 Payments For Extraordinary Items 2.80
Sale Of Fixed Assets 43.50 Purchase Of Fixed Assets 32.91
Sale Of Investments 42.85 Purchase Of Investments 529.80
Long Term Borrowings 2253.02 Interest Paid 12.52
Cash From Operations 449.36 Closing Cash Balance 593.61
Trade And Other Receivables 1194.80
5684.13 5684.13

Fund Flow

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FUNDS : WORKING CAPITAL

FLOW OF FUNDS: THE TERM FLOW MEANS

Funds flow statements is dealt by Accounting Standard 7 .

Working capital:- It is the difference between current assets and

Steps in preparation of funds flow statement:-

1. Preparation of working capital statement that explains increase or

Flow in fund Not flow in funds

This statement is based on the working Capital concept of

It measures the inflows and outflows of working capital

Funds flow statement measures and presents in an analytical

Funds Flow is the change in Working Capital

Current assets 2004 2005 Increase Decrease

Total 15357 10472

Total 8170.7 6290.1

Increase In Working Capital 3005 3005.02

(+) Non Fund Items

(-) NON FUND CR.

OPENING BAL. OF P&L A/C 321.03

FUNDS FROM OPERATION 220.07

SOURCES AMT. APPLICATION AMT.

ISSUE OF CAPITAL 49 Increase In WC 3005.02

FUNDS FROM OPERATION 220.07 Investments 486

SALE OF FIXED ASSET 2.56

LONG TERM LOANS 2253.02

TOTAL 3491.02 3491.02

Uses of Cash Flow Statement:

Helps in efficient cash management

A cash flow statement is a statement which portrays

It helps in taking short term financial decisions and

Net Profit Before Tax 330.22

(Less) Non-cash Incomes

Profit on sold Assets 43.19

Cash From Operations 449.36

Inflow Of Cash Outflow Of Cash

Opening Cash Balance 555.36 Advances 3180.69

Trade Payables 1119.70 Direct Taxes Paid 137.00

Deposits 1220.34 Payments For Extraordinary Items 2.80

Sale Of Fixed Assets 43.50 Purchase Of Fixed Assets 32.91

Sale Of Investments 42.85 Purchase Of Investments 529.80

Long Term Borrowings 2253.02 Interest Paid 12.52

Cash From Operations 449.36 Closing Cash Balance 593.61

Trade And Other Receivables 1194.80

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