Fundflow Statement

Fund Flow Statement
Funds flow Analysis
Thisstatement is based on the ‘working Capital’

concept of funds.
Itmeasures 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’

WHAT IS FUNDS FLOW STATMENT
 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”.
USES OF FUND FLOW STATEMENT:
 What funds were available during the accounting
period and for what purpose these funds were utilized?
 Have long term sources been adequate to finance

fixed asset purchase?
 Does the firm possess adequate working capital?
 How much funds have been generated from
operations?
 Why did the firm not pay dividend in spite of adequate
profit?
Meaning of fund flow statement
 This statement reveals resources from which

funds were obtain by the firm and the specific
uses to which such funds were applied.
 The effectiveness of financial management in

procuring funds from various sources & using
them effectively for generating income
without sacrificing the financial position of the
firm is reflected in fund flow statement .
Definitions of fund flow statement
 In the words of Foulke, R.A., “a statement of

source and application of fund is a technical device
design to analysis the changes in the financial
condition of business enterprises between two
dates”.
 According to Almond Coleman, “ The fund flow

statement summarizing the significant financial
changes which were occurred between the
beginning & the end of a company’s accounting
periods”.
Preparation of Fund Flow Statement
The changes which occurred in the current accounts

as a result flow of fund are reflected in a statement
known as ‘schedule of changes in working
capital’ .
The similar changes in non current accounts are

shown in ‘Fund Flow Statement’.
Statements to be Prepared are:

1. Statement or Schedule of Changes in
Working Capital.
2. Statement of Sources and Uses of Funds or

Funds Flow Statement.
Current assets
Fixed assets
Cash in hand and bank
Debtors Land and building
Marketable investments Furniture & Fixtures
Accounts/ Bills receivables Plant and machinery
Stock Long term investment
Prepaid exp.
Fixed liabilities
Current liabilities
Share capital
Creditors
Reserve and surplus
Bank overdraft
Debentures
Outstanding expenses
Long term loans
Accounts/ Bills payable
Flow in fund Not flow in funds

Statement or Schedule of Changes in Working Capital.
Previous Current Effect on Working
Item capital
Year Year
Increase Rs. Decrease Rs.
(A) Current Assets
Cash at bank
Cash in hand
Stock in trade
Debtors
Bills receivable
Advance payment
Short term investment
Prepaid expense
Accrued income
Total (A)
(B) Current Liabilities
(1) Short term loans
(2) Bank overdraft
(3) Creditors
(4) Bills payable
(5) Outstanding expenses
(6) Unclaimed dividend
Total (B)
Net Working Capital (A-B)
Increase / Decrease in Working
Capital
Total
FUND FLOW STATEMENT
Sources of Fund Amount Uses Of Funds Amount
Fund from operation

Loss from operation
Issue of share
Redemption of Pref. shares
Issue of debenture
Redemption of debentures
long term loans
Repayment of long term loans
Sale of fixed assets /
Purchase of fixed assets
Investment
/ Investments
Non trading receipts
Payment of dividend & taxes
Decrease in working capital
Increase in working capital
(if any)
(if any)
Specimen statement of funds from operation
Particulars Rs. Rs.

Net profit for the Current year xxxx
Add:
1. Depreciation written off
2. Goodwill written off
3. Preliminary expenses written off
4. Provision for taxation
5. Transfer to reserve
6. Dividend/interim/proposed dividend paid
7. Loss on sale of fixed asset
8. Discount on issue of shares and debentures written off
9. Patents written off
Less:
1. Dividend received
2. Profit on sale of fixed assets
3. Appreciation in the value of fixed asset
4. Rent received
5. Refund of tax
Funds from operation: XXXX
Note:
If the P&L A/c shows a net loss, the above
procedure will be reversed.
Net profit = closing balance of P&L A/c –
opening balance of P&L A/c
Solution:
Calculation of Funds from operation:
Particulars Rs. Rs.
Net Profit 1,15,800
Add: Non-profit expenses
Depreciation 70,000
Loss on sale of machinery 4,000
Discount 200
Goodwill 20,000 94,200
--------- ------------
2,10,000
Less: Non operating income
Gain on sale of land 60,000
-------------
Funds from operations 1,50,000
THANK YOU

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Fund Flow Statement

Funds flow Analysis

Thisstatement is based on the ‘working Capital’

Itmeasures the inflows and outflows of working

Funds flow statement measures and presents in

‘Funds Flow’ is the change in ‘Working Capital’

 FUNDS : WORKING CAPITAL

 FLOW OF FUNDS: THE TERM FLOW MEANS

 Have long term sources been adequate to finance

 This statement reveals resources from which

 The effectiveness of financial management in

 In the words of Foulke, R.A., “a statement of

 According to Almond Coleman, “ The fund flow

The changes which occurred in the current accounts

The similar changes in non current accounts are

Statements to be Prepared are:

2. Statement of Sources and Uses of Funds or

Flow in fund Not flow in funds

Fund from operation

Particulars Rs. Rs.

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