PRESENTATION

ON
 FUND FLOW STATEMENT

Meaning of Fund Flow.


ØFund flow statement consist with two word fund and flow.


ØFund means cash or working capital or all resource of

fund and flow means change .


ØFund flow refers to change in financial position in

beginning of financial period to end of year .


ØThus, Fund Flow means transfer of values from one asset

to another, from one liability to another, from one asset
to liability or vice-versa.


ØSo Fund Flow refers to increase or decrease in net

working capital.



Procedure of Preparation of Fund Flow
Statement
Ø The changes which occurs in the current accounts are reflected
in a statement known as ‘schedule of changes in working
capital’ .


Ø The similar changes in non current accounts are shown in

‘Fund Flow Statement’.


Ø Therefore, following 3 statements under this techniques

 are important.


 1. Statement or Schedule of Changes in Working Capital.



 2. Statement of Sources and Uses of Funds or Funds Flow

 Statement.
3. Schedule of Funds from Operations.
Schedule of Changes in Working Capital.
Ø Working capital will increase :
 When there is an increase in current asset and
 decrease in current liabilities.


Ø Working capital will decrease:

 When there is a decrease in current asset & increase
 in current liabilities.


Ø Net increase in working capital is treated as use of

 funds & the net decrease in working capital is
 treated as source of funds.

 Statement or Schedule of Changes in Working
Capital.
Previous Year Current Year Effect on Working capital
Decrease Rs.
Particulars Increase Rs.
(A) Current Assets
Cash at bank

Cash in hand
Debtors
Total (A)
(B) Current Liabilities
Bank overdraft

Creditors
Bills payable
Total (B)
Net Working Capital (A-B)

Increase / Decrease in
Statement of Sources & Uses of Funds.
ØThis statement reveals resources from which funds
were obtain by the firm and the specific uses to
which such funds were applied.


ØThis fund flow statement has two parts :



1.Sources of fund.
3.Application of fund
Fund Flow Statement
Sources of Fund Amount Uses Of Funds Amount
Fund from operation Loss from operation
Issue of share Redemption of
Issue of debenture preference shares
long term loans Redemption of
Sale of fixed assets / debentures
Investment Purchase of fixed assets
Decrease in working / Investments
capital Payment of dividend & taxes
(if any) Increase in working capital
(if any)
Schedule of Funds from Operations
Particular Amount Particular Amount
Depreciation Profit or gain on sale of
Loss on sale of fixed assets fixed asset
Under writing commissions Dividend received
Discount on issue of shares & Interest received of
debentures investment
Preliminary expense written off Profit on revaluation
Goodwill written off of asset.
Fund from operation.