Format Of Cash Flow And Fund Flow Statement Pdf


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format of cash flow and fund flow statement pdf

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The Cash Flow Statement , or Statement of Cash Flows , summarizes a company's inflow and outflow of cash, meaning where a business's money came from cash receipts and where it went cash paid. By "cash" we mean both physical currency and money in a checking account. The cash flow statement is a standard financial statement used along with the balance sheet and income statement.

Cash Flow statement shows the changes in the cash position Inflows and outflows of a firm. It is an analytical reconciliation statement which explains the reasons for the differences between the opening and closing cash balances over a period. The financial position of any company can be better understood with the help of a cash flow statement and fund flow statement, along with the Balance Sheet and Income statement.

Cash Flow vs. Fund Flow: What's the difference?

There are 3 basic financial statements that exist in the area of Financial Management. Balance Sheet. Income Statement. Cash Flow Statement. Fund Flow Statement. The first two statements measure one aspect of performance of the business over a period of time.

Cash flow statements signify the changes in the cash and cash equivalents of the business due to the business operations in one time period. Funds flow statements report changes in a business's working capital from its operations in a single time period, but have largely been superseded by cash flow statements.

It explains the inflows receipts and outflows disbursements of cash over a period of time. The inflows of cash may occur from sale of goods, sale of assets, receipts from debtors, interest, dividend, rent, issue of new shares and debentures, raising of loans, short-term borrowing, etc. The cash outflows may occur on account of purchase of goods, purchase of assets, payment of loans loss on operations, payment of tax and dividend, etc.

A cash flow statement is different from a cash budget. A cash flow statement shows the cash inflows and outflows which have already taken place during a past time period.

On the other hand a cash budget shows cash inflows and outflows which are expected to take place during a future time period. In other words, a cash budget is a projected cash flow statement. The main components of Working Capital are:. Current Assets. Current Liabilities. Net working capital is the total change in the business's working capital, calculated as total change in current assets minus total change in current liabilities. FOR EXAMPLE: If the inventory of the business increased from Rs 1,40, to Rs 1,60,, then this increase of Rs 20, is the increase in the working capital for the corresponding period and will be mentioned on the funds flow statement.

But the same would not be reflected in the cash flow statement as it does not involve cash. So the Fund Flow Statement uses all the above four components and shows the change in them. While a cash flow statement only shows the change in cash position of the business.

Cash flow statements have largely superseded funds flow statements as measurements of a business's liquidity because cash and cash equivalents are more liquid than all other current assets included in working capital's calculation.

What is Included in a Cash Flow Statement? The statement of cash flows uses information from the other two statements Income Statement and Balance Sheet to indicate cash inflows and outflows. A Cash Flow Statement comprises information on following 3 activities:.

Operating Activities. Investing Activities. Financing Activities. Operating Activities: Operating activities include cash flows from all standard business operations. Cash receipts from selling goods and services represent the inflows.

The revenues from interest and dividends are also included here. The operational expenditures are considered as outflows for this section. Although interest expenses fall under this section but the dividends are not included. Dividends are considered as a part of financing activity in financial accounting terms. Investing Activities: Investing activities include transactions with assets, marketable securities and credit instruments.

The sale of property, plant and equipment or marketable securities is a cash inflow. Purchasing property, plant and equipment or marketable securities are considered as cash outflows. Loans made to borrowers for long-term use is another cash outflow. Collections from these loans, however, are cash inflows.

Financing Activities: Financing activities on the statement of cash flows are much more defined in nature. The receipts come from borrowing money or issuing stock. The outflows occur when a company repays loans, purchases treasury stock or pays dividends to stockholders. Basis of Difference. Funds Flow Statement. Basis of Analysis. Funds flow statement is based on broader concept i. Cash flow statement is based on narrow concept i. Funds flow statement tells about the various sources from where the funds generated with various uses to which they are put.

Cash flow statement stars with the opening balance of cash and reaches to the closing balance of cash by proceeding through sources and uses. Funds flow statement is more useful in assessing the long-range financial strategy.

Cash flow statement is useful in understanding the short-term phenomena affecting the liquidity of the business. Schedule of Changes in Working Capital. In funds flow statement changes in current assets and current liabilities are shown through the schedule of changes in working capital. In cash flow statement changes in current assets and current liabilities are shown in the cash flow statement itself. End Result. Funds flow statement shows the causes of changes in net working capital. Cash flow statement shows the causes the changes in cash.

Principal of Accounting. Funds flow statement is in alignment with the accrual basis of accounting. In cash flow statement data obtained on accrual basis are converted into cash basis. Advantages of Cash Flow Statement. It shows the actual cash position available with the company between the two balance sheet dates which funds flow and profit and loss account are unable to show. So it is important to make a cash flow report if one wants to know about the liquidity position of the company.

It acts like a filter and is used by many analyst and investors to judge whether company has prepared the financial statements properly or not because if there is any discrepancy in the cash position as shown by balance sheet and the cash flow statement, it means that statements are incorrect. Disadvantages of Cash Flow Statement. Since it shows only cash position, it is not possible to deduce actual profit and loss of the company by just looking at this statement.

In isolation this is of no use and it requires other financial statements like balance sheet, profit and loss etc…, and therefore limiting its use. Advantages of Fund Flow Statements. A Funds flow statement is prepared to show changes in the assets, liabilities and equity between two balance sheet dates, it is also called statement of sources and uses of funds. The advantages of such a financial statement are many fold.

Some of these are:. Funds flow statement reveals the net result of Business operations done by the company during the year. In addition to the balance sheet, it serves as an additional reference for many interested parties like analysts, creditors, suppliers, government to look into financial position of the company. The Fund Flow Statement shows how the funds were raised from various sources and also how those funds were deployed by a company, therefore it is a great tool for management when it wants to know about where and from what sources funds were raised and also how those funds got utilized into the business.

It reveals the causes for the changes in liabilities and assets between the two balance sheet dates therefore providing a detailed analysis of the balance sheet of the company.

Funds flow statement helps the management in deciding its future course of plans and also it acts as a control tool for the management. Funds flow statement should not be looked alone rather it should be used along with b alance sheet in order judge the financial position of the company in a better way.

Disadvantages of Fund Flow Statements. F unds flow statement has many advantages; however it has some disadvantages or limitations also. Funds Flow statement has to be used along with balance sheet and profit and loss account for inference of financial strengths and weakness of a company it cannot be used alone. Fund Flow Statement does not reveal the cash position of the company, and that is why company has to prepare cash flow statement in addition to funds flow statement.

Funds flow statement only rearranges the data which is there in the books of account and therefore it lacks originality. In simple words it presents the data in the financial statements in systematic way and therefore many companies tend to avoid preparing funds flow statements.

Funds flow statement is basically historic in nature, that is it indicates what happened in the past and it does not communicate anything about the future, only estimates can be made based on the past data and therefore it cannot be used the management for taking decision related to future.

Please post your comments, queries and we would be happy to answer them Thanks a lot Very clearly explained. Easy to understand. Thanks for providing such a nice information. Is payment of dividends also included in the Fund flow statement as well as the cash flow statement? Nicely m explained. It will be helpful for the manager of asset liability manageent. I would be also beneficial to the readers if an it is explained presenting two balance sheets.

Many thanks. Difference is explained in expressive way easy in understanding. THanks a lot!!! Like the suggested details provided.

14+ Fund Flow Statement Templates in Google Docs | Google Sheets | Word | Pages| PDF | Numbers

Cash is one of the key elements for a business to stay alive. The amount of budget lets you measure your capabilities of investing, as well as quantifying your success rate. Through the years, companies examine their cash flow periodically to keep updated on their remaining budget and expenses. As a company owner, this is beneficial to ensure that you have sufficient cash to manage and operate your growth. A cash flow analysis is a simple document that keeps track of your inflows and outflows from your company. This measures and presents the amount of money generated by your business. Listed below are a few samples on cash flow analysis that may be beneficial for company owners like you in keeping track of your monetary statement.

10+ Sample Cash Flow Analysis – PDF

Read this article to learn about the steps, rules and format required for preparing funds flow statement with schedule of changes in working capital. For each non-current account on the balance sheet, establish the increase or decrease in that account. Analyze the change to decide whether it is a source increase or use decrease of working capital. Be sure the total of all sources including those from operations minus the total of all uses equals the change found in working capital in Step 1. Changes in fixed non-current assets and fixed non-current liabilities affects working capital.

In financial accounting , a cash flow statement , also known as statement of cash flows , [1] is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents , and breaks the analysis down to operating, investing, and financing activities. Essentially, the cash flow statement is concerned with the flow of cash in and out of the business. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. The cash flow statement was previously known as the flow of funds statement. The statement of financial position is a snapshot of a firm's financial resources and obligations at a single point in time, and the income statement summarizes a firm's financial transactions over an interval of time.

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There are 3 basic financial statements that exist in the area of Financial Management. Balance Sheet.

1. Sample Cash Flow Analysis

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Preparing Funds Flow Statement: Steps, Rules and Format

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Cash flow statement

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