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(505 (B) ) Analysis of Financial Statemnets BB223039 Shirke Kartiki Ratnadeep
(505 (B) ) Analysis of Financial Statemnets BB223039 Shirke Kartiki Ratnadeep
PROJECT REPORT
ON
“FUND FLOW STATEMENT”
SUBMITTED TO
SAVITRIBAI PHULE PUNE UNIVERSITY
IN PARTIAL FULFILLMENT OF
BACHELOR OF BUSINESS ADMINISTRATION [BBA-III]
SUBMITTED BY
MISS. SHIRKE KARTIKI RATNADEEP
UNDER THE GUIDANCE OF
PROF. SNEHAL PHALLE
THROUGH
SNBP COLLEGE OF ARTS COMMERCE SCIENCE &
MANAGEMENT STUDIES, MORWADI, PUNE
ACKNOWLEDGEMENT
7 Bibliography 26
EXECUTIVE SUMMARY
ABSTRACT
In this type of statement only inflow and outflow of cash flow obtain into
account.
This narrow concept of cash flow often leads to omission of such items
which do not directly affect cash or working capital.
MEANING OF FUNDS
In a limited sense, the term ‘fund’ means ‘cash’. But this is not the correct
meaning of the term ‘fund’ because there are many transactions in the
business which do not result in inflow or outflow of cash but certainly
result in the inflow or outflow of funds.
MEANING OF FLOW
The term ‘flow’ means change or movement. Therefore, the term ‘Flow of
Funds’ means ‘change in funds’ or ‘change in Working Capital’. In other
words, ‘FLOW of Funds means increase or decrease in working capital.
It deals with the transactions which change either the amount of current
assets and current liabilities (in the form of decrease or increase in
working capital) or fixed assets, long-term loans including ownership
fund.
It gives a clear picture about the movement of funds between the opening
and closing dates of the Balance Sheet.
Fund flow statement shows how the financial resources have been used
during a particular period of time.
It is, thus, a historical statement showing sources and application of funds
between the two dates designed especially to analyse the changes in the
financial conditions of an enterprise.
Various titles are used for this statement such as ‘Statement of sources and
Application of Funds’, ‘Summary of Financial operations,’ ‘Changes in
Financial Position’, ‘Fund received and Disbursed’, ‘Funds Generated and
Expended’, Changes in Working Capital”, “Statement of Fund’ etc.
Title of Funds Flow Statement has been modified from time to time.
Really it is very difficult to find a short time for such statement which
carries much to the readers regarding its contents and functions.
It seems to be the most suitable meaning fort the term ‘funds’ but the most
commonly used interpretation of the term ‘funds’ is ‘working capital’
It serves to analyst past activity. The statement will show how the
resources have been obtained and the uses to which they are put .
Advantages of Fund Flow Statement
It shows how the funds were raised from various sources and also
how those funds were put to use in the business, therefore it is a
great tool for management when it wants to know about where
and from funds were raised and also how those funds got utilized
into the business.
For preparing the Funds Flow Statement, the first step is to prepare
the Statement of Changes in Working Capital.
There may be several reasons for changes in the Working Capital Position
of a Company, some of which have been discussed below:-
The next Step is to prepare the Funds generated only from the Operating
Activities of the Business and not from the Investing/Financing Activities
of the business. The Funds from Operations shall be prepared as follows:-
Particulars Amount
ADD
(LESS)
While preparing the Funds Flow Statement, the Sources and Uses of
Funds are to be disclosed clearly so as to highlight the Sources from
where the Funds have been generated the Uses to which these Funds
have been applied.
Sources of Funds
Application of Funds
Funds Flow Statement is useful for Long Term Analysis. It is a very useful
tool in the hands of the management for judging the financial and operating
performance of the Company.
The Balance Sheet and the Profit and Loss A/c (Income Statement) fail to
provide the information which is provided by the Funds Flow Statement i.e.
Changes in Financial Position of an enterprise. Such an analysis is of great
help to the management, shareholders, creditors etc
To prepare a fund flow statement, list the receipts from assets and
liabilities on the sources side and the payments for assets and liabilities on
the application side.
Fund flow statement is very important for every organization. It can really
determine how the business should be carried on in the future.
we can proper utilize the budget of the company and the strategy to cope
the financial problems of the company through the preparation of the fund
flow statement.
As we know the aim of fund flow statement is to know the working capital
of the company whether it increases or decreases during a given period of
time.
So it is a main tool to make a organization to survive in the future.
A fund flow statement shows the various means by which funds have been
obtained and used in a business over a specific period. As such, such a
statement is a statement of a firm’s cash inflows and cash outflows.
To further highlight the term “funds”, note that there are commentators
who view funds as cash or working capital, which represent the excess
of current assets over current liabilities.
BIBLIOGRAPHY
https://www.google.com
https://www.investopedia.com
https://www.wikipedia.com
https://www.fundflow.com
https://www.financemanagement.com