Professional Documents
Culture Documents
Cash Inflow
1) 2) 3) 4) Cash Sales Received from Debtor Commission & Fees Royalty 1) 2) 3) 4) 5) 6)
Cash Outflow
Cash Purchases Payment to Creditors Cash Operating Expenses Payment of Wages Income Tax Manufacturing Expenses
Cash Inflow
1) 2) 3) 4) 5) Sale of Fixed Assets Sale of investments Interest Received Dividend Received Working Capital Recovery
Cash Outflow
1) Purchase of Fixed Assets 2) Purchase of Investments 3) Working Capital
Cash Inflow
1) Issue of Shares in Cash 2) Issue of Debentures in Cash 3) Proceeds from long-term borrowings
Cash Outflow
1) Payment of Loans 2) Redemption of Preference Shares 3) Payment of Dividends 4) Interest Paid 5) Repayment of Finance/ Lease Liability
Does not show the liquidity position of the firm It is not a substitute of income statement Does not show the financial position of the firm in totality
Funds Flow
It is based upon accrual Basis of accounting I.e Working capital It is useful for long-term Financial planning Schedule of changes in Working capital is Prepared separately It studies causes of Change in working capital
Significance
Schedule of Changes in Working Capital Causes of Variation
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Book Approach
Income Statement
Revenues Expenses Cost of Goods Sold Depreciation* Operating Expenses Taxable Income Income Taxes Net Income
Operating + Investing
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Financing