Funds Flow Statement

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COME AND JOIN AFTERSCHOOOL AND TELL OTHERS HOW TO PREPARE FUNDS FLOW STATEMENT AND HOW TO DO FINANCIAL ANALYSIS

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Funds Flow Statement

  1. 1. FUNDS FLOW STATEMENT AFTERSCHO ☺ OL – DEVELOPING CHANGE MAKERS CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME – World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship OPEN FOR ALL FREE FOR ALL www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS
  2. 2. FUNDS FLOW STATEMENT Dr. T.K. Jain. AFTERSCHO ☺ OL Centre for social entrepreneurship Bikaner M: 9414430763 [email_address] www.afterschool.tk , www.afterschoool.tk www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS
  3. 3. WHAT IS A FUND? <ul><li>FUND MEANS NET WORKING CAPITAL </li></ul><ul><li>CURRENT ASSET IS ALSO CALLED GROSS WORKING CAPITAL OR FUND </li></ul><ul><li>NET WORKING CAPITAL (CURRENT ASSET – CURRENT LIABILITIES) IS ALSO CALLED FUND. </li></ul>
  4. 4. WHAT IS FUND FLOW ? <ul><li>IF FUNDS INCREASE OR DECREASE, THERE IS FUNDS FLOW. </li></ul><ul><li>IF CURRENT ASSETS INCREASE OR DECREASE, THERE IS FUNDS FLOW </li></ul><ul><li>IF CURRENT LIABILITIES INCREASE OR DECREASE, THERE IS FUNDS FLOW. </li></ul>
  5. 5. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>PURCHASED BUILDING AGAINST ISSUE OF SHARES </li></ul><ul><li>Answer: </li></ul><ul><li>There is no funds flow as there is no change in working capital. Fixed assets (building) have increased along with increase in long term liabilities (shares) – thus there is no funds flow. </li></ul>
  6. 6. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Purchased Raw Material against cash </li></ul><ul><li>Answer : </li></ul><ul><li>No – there is no funds flow – as stock has increased but cash has decreased equally – the net impact is nil. </li></ul>
  7. 7. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Purchased Furniture against cash </li></ul><ul><li>Answer: </li></ul><ul><li>Yes, there is funds flow as current assets have decreased and fixed assets (furniture) have increased. </li></ul>
  8. 8. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Purchased furniture on 3 month credit. </li></ul><ul><li>Answer : </li></ul><ul><li>Yes – fixed assets have increased, and current liability has also increased, thus net working capital has decreased. Thus there is flow of fund (as current liability has increased so net working capital (ca-cl) has decreased). </li></ul>
  9. 9. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Redeemed Debentures. </li></ul><ul><li>Answer : </li></ul><ul><li>Yes, we have paid long term liabilities (so they have reduced), simultaneously, we have also decreased our current assets (cash / bank), thus there is funds flow (change in net working capital). </li></ul>
  10. 10. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>There is bad debt of Rs. 5000. </li></ul><ul><li>Answer : </li></ul><ul><li>Yes, </li></ul><ul><li>Bad debt results in reduction in current assets – thus net working capital (funds) have reduced). </li></ul>
  11. 11. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Purchased securities (maturing in next 1 year). </li></ul><ul><li>Answer: </li></ul><ul><li>No – as funds have remained unchanged. Securities (short term) are also current assets and bank / cash is also current asset – one has increased and one has decreased. </li></ul>
  12. 12. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Sold project A against shares of company XYZ </li></ul><ul><li>Answer: </li></ul><ul><li>No – there is no change in funds – long term assets have been exchanged against long term assets. </li></ul>
  13. 13. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>The company buys a car for use by Mr. Ramesh, the MD of the company. </li></ul><ul><li>answer: </li></ul><ul><li>Yes, fixed assets has increased but current asset has reduced, thus there is flow of fund. </li></ul>
  14. 14. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Depreciation of building. </li></ul><ul><li>Answer: </li></ul><ul><li>No – there is no flow of fund </li></ul>
  15. 15. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Sales of Rs. 10 lakhs out of which 2 lakhs are profit. </li></ul><ul><li>Answer: </li></ul><ul><li>Rs. 2 lakhs are funds - as it will increase our working capital. </li></ul>
  16. 16. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>One employee takes loan of Rs. 50000 for 10 months. </li></ul><ul><li>Answer: </li></ul><ul><li>No – there is no change in funds – as current assets have increased (loans and advances) and decreased (cash/ bank) simultaneously. </li></ul>
  17. 17. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Bank overdraft paid </li></ul><ul><li>Answer: </li></ul><ul><li>No change on funds as current liabilities (bank overdraft) has decreased along with cash / bank balance - so there is no net impact. </li></ul>
  18. 18. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Purchased shares of Jitu Forex International Inc. </li></ul><ul><li>Answer: </li></ul><ul><li>Yes – there is funds flow as fixed assets are increasing (investment) along with decrease in current assets. </li></ul>
  19. 19. IS THERE FUNDS FLOW IN THE FOLLOWING CASES? <ul><li>Provision for Taxation increased </li></ul><ul><li>Answer : </li></ul><ul><li>Treat provision for taxation as current liability, show the difference in statement of changes in working capital (no entry is required in funds flow statement and P& L statement even for payment of taxes). </li></ul><ul><li>2 nd option: add this year’s provision in P & L A/c and also show the payments in Funds Flow statement. </li></ul>
  20. 20. About AFTERSCHO☺OL <ul><li>PGPSE - World’s most comprehensive programme on social entrepreneurship – after class 12 th </li></ul><ul><li>Flexible – fast changing to meet the requirements </li></ul><ul><li>Admission open throughout the year </li></ul><ul><li>Complete support from beginning to the end – from idea generation to making the project viable. </li></ul>
  21. 21. Branches of AFTERSCHO☺OL <ul><li>PGPSE programme is open all over the world as free online programme. </li></ul><ul><li>Those who complete PSPSE have the freedom to start branches of AFTERSCHO☺OL </li></ul><ul><li>A few branches have already started - one such branch is at KOTA (Rajasthan). </li></ul>
  22. 22. Workshop on social entrepreneurship <ul><li>We conduct workshop on social entrepreneurship – all over India and out of India also - in school, college, club, association or any such place - just send us a call and we will come to conduct the workshop on social entrepreeurship. </li></ul><ul><li>These workshops are great moments of learning, sharing, and commitments. </li></ul>
  23. 23. FREE ONLINE PROGRAMME <ul><li>AFTERSCHO☺OL is absolutely free programme available online – any person can join it. The programme has four components : </li></ul><ul><li>1. case studies – writing and analysing – using latest tools of management </li></ul><ul><li>2. articles / reports writing & presentation of them in conferences / seminars </li></ul><ul><li>3. Study material / books / ebooks / audio / audio visual material to support the study </li></ul><ul><li>4. business plan preparation and presentations of those plans in conferences / seminars </li></ul>
  24. 24. 100% placement / entrepreneurship <ul><li>AFTERSCHO☺OL has the record of 100% placement / entrepreneurship till date </li></ul><ul><li>Be assured of a bright career – if you join AFTERSCHO☺OL </li></ul>
  25. 25. Pursue professional courses along with PGPSE <ul><li>AFTERSCHO☺OL permits you to pursue distance education based professional / vocational courses and gives you support for that also. Many students are doing CA / CS/ ICWA / CMA / FRM / CFP / CFA and other courses along with PGPSE. </li></ul><ul><li>Come and join AFTERSCHO☺OL </li></ul>

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