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BY: 
WEENA YANCEY 
KYRMEN 
SINGLEMAN 
DIPJOYTI
 WHAT IS FUND FLOW? 
 DIAGRAM OF FUND FLOW 
 USES AND LIMITATIONS OF FUND FLOW 
STATEMENT. 
 OBJECTIVES OF FUND FLOW S...
 IN NARROW SENSE,IT MEANS CASH ONLY AND A 
FUNDS FLOW STATEMENT PREPARED ON THIS BASIS IS 
CALLED A CASH FLOW STATEMENT.S...
 TRANSFER OF ECONOMIC VALUES FROM ONE 
ASSET OF EQUITY TO ANOTHER. 
 MOVEMENT OF FUNDS IN WORKING CAPITALS 
 IT TAKES P...
USES: 
 EXPLAINS THE FINANCIAL CONSEQUENSES OF 
BUSINESS. 
 DEBT CAPITAL IS ESSENTIAL FOR INCREASED 
PROFITS. 
 ACTS AS...
 IGNORES NON – FUND ITEMS. 
 DOES NOT REVEAL SHIFTS ITEMS MAIKING UP 
THE CURRENT ASSETS AND CURRENT 
LIABILITIES. 
 IT...
 TO INDICATE THE RESULTS OF CURRENT 
FINANCIAL MANAGEMENT. 
 TO LAY EMPHASIS ON THE MOST SIGNIFICANT 
CHANGES THAT HAS T...
 TO ESTABLISHED THE RELATIONASHIP 
BETWEEN PROFIT FROM OPERATIONS, 
DISTRIBUTION OF DIVIDEND AND RISING OF 
CAPITAL OR CO...
FUND FLOW STATEMENT CASH FLOW STATEMENT 
1. IT IS BASED ON THE CONCEPT 
OF WORKING CAPITAL.. 
2. IT REVEALS CHANGES IN 
WO...
FUND FLOW STATEMENT CASH FLOW STATEMENT 
5. AN IMPROVEMENT IN CASH 
POSITION RESULTS IN THE 
IMPROVEMENT IN WORKING 
CAPIT...
ISSUE OF 
SHARES 
SALES OF FIXED 
ASSETS 
Long term 
borrowings 
Operational 
profit 
Funds 
Redemption of 
pref.shares. 
...
INVOLVES TWO STATEMENTS: 
1. STATEMENT OR SCHEDULE OF CHANGES IN 
WORKING CAPITAL 
2. SOURCES AND USES OF FUND STATEMENT.
 RULES FOR PREPARING THE STATEMENT OF CHANGES IN 
WORKING CAPITAL: 
1. INCREASE IN CURRENT ASSET, RESULTS IN 
INCREASE (+...
PREVIOUS YEAR 
RS. 
CURRENT 
YEAR 
RS. 
EFFECT OF 
WORKING 
CHANGE ON 
CAPITAL 
INCREASE 
RS. 
DECREASE 
RS. 
CURRENT 
ASS...
TOTAL (b) 
WORKING CAPITAL (a-b) 
NET INCREASE/DECREASE IN 
WORKING CAPITAL
Eg.: FROM THE FOLL. TWO BALANCE SHEETS ON 
31.03.2001 AND 31.03.2002 PREPARE A SCHEDULE 
OF CHANGES IN WORKING CAPITAL. 
L...
2001 
RS. 
2002 
RS. 
EFFECTS 
ON 
CAPITAL 
WORKING 
INCREASE 
(+) 
RS. 
DECREASE 
(-) 
RS. 
CURRENT ASSETS: 
STOCK – IN T...
CURRENT LIABILITIES: 
TRADE 
CREDITORS 
OUTSTANDING 
CREDITORS 
(b) TOTAL CURRENT 
LIABILITIES 
WORKING CAPITAL (a 
-b) 
N...
SOURCES RS. APPLICATIONS RS. 
ISSUES OF SHARES 
ISSUES OF 
DEBENTURES 
LONG TERM & MIDDLE 
– TERM LAONS TAKEN 
SALES OF 
I...
Fund flow statement is very important for every 
organization. It can really determine how the business 
should be carried...
 SRINIASAN N.P. & MURUGAN N. SAKTHIVEL, 4TH 
EDITION 2004,ACCOUNTING FOR MANAGEMENT, 
S.CHAND PUBLICATIONS, NEW DELHI, p....
THANK 
YOU
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Fund flow ppt

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Fund flow ppt

  1. 1. BY: WEENA YANCEY KYRMEN SINGLEMAN DIPJOYTI
  2. 2.  WHAT IS FUND FLOW?  DIAGRAM OF FUND FLOW  USES AND LIMITATIONS OF FUND FLOW STATEMENT.  OBJECTIVES OF FUND FLOW STATEMENT.  DIFFERENCE BETWEEN FUND FLOW AND CASH FLOW STATEMENT  PREPARATION OF FUND FLOW STATEMENT.  CONCLUSION.  BIBLIOGRAPHY.
  3. 3.  IN NARROW SENSE,IT MEANS CASH ONLY AND A FUNDS FLOW STATEMENT PREPARED ON THIS BASIS IS CALLED A CASH FLOW STATEMENT.SUCH A STATEMENT ENUMERATES NET EFFECTS OF THE VARIOUS TRANSCATIONS ON CASH AND TAKES INTO ACCOUNT RECIPTS AND DISBURSEMENT OF CASH.  IN A BROADER SENSE, THE TERM ‘FUNDS’ REFERS TO MONEY VALUES IN WHATEVER FORM IT MAY EXSIST. MEANS ALL FINANCIAL RESOURCES USED IN BUSINESS WHETHER IN THE FORM OF MEN,MATERIAL ,MONEY,MACHINERY,METHODES ETC.  IN A POPULAR SENSE THE TERM ‘FUNDS’ MEANS WORKING CAPITAL WHICH IS THE EXCESS OF CURRENT ASSETS OVER CURRENT LIABILITIES
  4. 4.  TRANSFER OF ECONOMIC VALUES FROM ONE ASSET OF EQUITY TO ANOTHER.  MOVEMENT OF FUNDS IN WORKING CAPITALS  IT TAKES PLACE WHEN ANY TRANSACTION MAKES CHANGES IN THE AMOUNT OF FUNDS AVAILABLE BEFORE HAPPENING OF THE TRANSACTION.  IF THERE IS INCREASE OF FUNDS,IT IS SOURCE OF FUNDS  IF THERE IS A DECREASE OF FUNDS,IT IS AN APPLICATION OF FUNDS INCREASES SOURCE OR INFLOW DECREASE APPLICATION OR OUT FLOW
  5. 5. USES:  EXPLAINS THE FINANCIAL CONSEQUENSES OF BUSINESS.  DEBT CAPITAL IS ESSENTIAL FOR INCREASED PROFITS.  ACTS AS AN INSTUMENT FOR ALLOCATION OF COMPANY’S RESOURCES.  TEST FOR EVALUATING USE OF WORKING CAPITAL BY THE MANAGEMENT INFORMATION.
  6. 6.  IGNORES NON – FUND ITEMS.  DOES NOT REVEAL SHIFTS ITEMS MAIKING UP THE CURRENT ASSETS AND CURRENT LIABILITIES.  IT IS HISTORICAL IN NATURE.
  7. 7.  TO INDICATE THE RESULTS OF CURRENT FINANCIAL MANAGEMENT.  TO LAY EMPHASIS ON THE MOST SIGNIFICANT CHANGES THAT HAS TAKEN PLACE, DURING A SPECIFIC PERIOD.  TO SHOW HOW GENERAL EXPANSION IN THE BUSINESS HAS BEEN FINANCED OR TO DESCRIBED THE SOURCES FROM WHICH ADDITIONAL FUNDS WERE DERIVED.
  8. 8.  TO ESTABLISHED THE RELATIONASHIP BETWEEN PROFIT FROM OPERATIONS, DISTRIBUTION OF DIVIDEND AND RISING OF CAPITAL OR CONTRATING OF LOANS.  TO GIVE RECOGNITION TO THE FACT THAT A BUSINESS EXISTS IN THE FLOW OF FUNDS AND IS NOT STATIC ORGANISATION.
  9. 9. FUND FLOW STATEMENT CASH FLOW STATEMENT 1. IT IS BASED ON THE CONCEPT OF WORKING CAPITAL.. 2. IT REVEALS CHANGES IN WORKING CAPITAL POSITION BETWEEN TWO BALANCE SHEET DATES. 3.CLASSIFICATION OF ASSETS AND LIABILITIES INTO CURRENT AND NON – CURRENT CATEGORIES IS ESSENTIAL. 4. THESE STATEMENTS MATCH SOURC ES AND APPLICATION OF FUND. 1. IT IS BASED ON THE CONCEPT OF CASH. 2. IT REVEALS CHANGE IN CASH POSITION BETWEEN TWO BALANCE SHEET DATES. 3. NO SUCH CLASSIFICATION NECESSARY. 4. IT COMMENCES WITH OPENING CASH BALANCE AND ENDS WITH CLOSING CASH BALANCE.
  10. 10. FUND FLOW STATEMENT CASH FLOW STATEMENT 5. AN IMPROVEMENT IN CASH POSITION RESULTS IN THE IMPROVEMENT IN WORKING CAPITAL. 6. IT IS LONG –TERM TOOL FINANCIAL ANALYSIS. 5. AN INCREASE IN CASH ON HAND DOES NOT RESULT IN INCREASE IN WORKING CAPITAL.. 6. IT IS A SHORT – TERM TOOL OF FINANCIAL ANALSIS.
  11. 11. ISSUE OF SHARES SALES OF FIXED ASSETS Long term borrowings Operational profit Funds Redemption of pref.shares. Purchase of fixed assets. Payment or long term loans. Payment of tax/Dividend.
  12. 12. INVOLVES TWO STATEMENTS: 1. STATEMENT OR SCHEDULE OF CHANGES IN WORKING CAPITAL 2. SOURCES AND USES OF FUND STATEMENT.
  13. 13.  RULES FOR PREPARING THE STATEMENT OF CHANGES IN WORKING CAPITAL: 1. INCREASE IN CURRENT ASSET, RESULTS IN INCREASE (+) IN WORKING CAPITAL. 2. DECREASE IN CURRENT ASSET, RESULTS IN DECREASES (-) IN WORKING CAPITAL. 3. INCREASE IN A CURRENT LIABILITY, RESULTS IN DECREASE (-) IN WORKING CAPITAL. 4. DECREASE IN A CURRENT LIABILITY, RESULTS IN INCREASE (+) IN WORKING CAPITAL.
  14. 14. PREVIOUS YEAR RS. CURRENT YEAR RS. EFFECT OF WORKING CHANGE ON CAPITAL INCREASE RS. DECREASE RS. CURRENT ASSETS CASH BANK B/R DEBTORSSTOCK PREPAID EXPENSES TOTAL (a) CURRENT LIABILITIES OUTSTANDING EXP B/P CREDITORS
  15. 15. TOTAL (b) WORKING CAPITAL (a-b) NET INCREASE/DECREASE IN WORKING CAPITAL
  16. 16. Eg.: FROM THE FOLL. TWO BALANCE SHEETS ON 31.03.2001 AND 31.03.2002 PREPARE A SCHEDULE OF CHANGES IN WORKING CAPITAL. LIABILITIES 2002 RS. 2001 RS. ASSETS 2002 RS. 2001 RS. SHARE CAPITAL P and L A/C 9% DEBENTURES TRADE CREDITORS OUTSTANDING CREDITORS 3,25000 1,20000 2,00000 98,000 2,000 7,45000 3,00000 1,00000 2,00000 75,000 5,000 6,80000 LAND &, BUILDINGS MACHINERY STOCK – IN TRADE DEBTORS CASH 5,00000 1,00000 1,00,000 30,000 5,000 7,45,000 4,00000 1,60000 80,000 36,000 4,000 6,80000
  17. 17. 2001 RS. 2002 RS. EFFECTS ON CAPITAL WORKING INCREASE (+) RS. DECREASE (-) RS. CURRENT ASSETS: STOCK – IN TRADE DEBTORS CASH (a) TOTAL CURRENT ASSET 80,000 36,000 4,000 1,10,000 30,000 5,000 30,000 1,000 6,000 1,20000 1,45,000
  18. 18. CURRENT LIABILITIES: TRADE CREDITORS OUTSTANDING CREDITORS (b) TOTAL CURRENT LIABILITIES WORKING CAPITAL (a -b) NET INCREASE IN WORKING CAPITAL 75,000 5,000 98,000 2,000 3,000 23,000 5,000 80,000 1,00,000 40,000 5,000 45,000 45,000 45,000 34,000 34,000
  19. 19. SOURCES RS. APPLICATIONS RS. ISSUES OF SHARES ISSUES OF DEBENTURES LONG TERM & MIDDLE – TERM LAONS TAKEN SALES OF INVESTMENTS SALES OF FIXED ASSETS TRADING PROFITS NON – TRADING INCOME NET DECREASE IN WORKING CAPITAL, AS PER SCHEDULE OF CHANGES IN WORKING REDEMPTION OF SHARES REDEMPTION OF DEBENTURES REPAYMENT OF LOANS PURCHASE OF INVESTMENTS PURCHASE OF FIXED ASSETS PAYMENT OF DIVIDENDS (LAST YEAR AND INTERIM) FUNDS LOST FROM OPERATIONS NON – TRADING PYMENTS NET INCREASE IN WORKING CAPITAL AS PER SCHEDULE OF CHANGES IN WORKING CAPITAL
  20. 20. 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.
  21. 21.  SRINIASAN N.P. & MURUGAN N. SAKTHIVEL, 4TH EDITION 2004,ACCOUNTING FOR MANAGEMENT, S.CHAND PUBLICATIONS, NEW DELHI, p. 258 – 263.  http://www.futureaccountant.com/funds-flow-cash- flow/study-notes/funds-flow-statement-inflow- outflow-sources-applications-funds.php  http://www.scribd.com/doc/13261978/Analysis -of-Fund-Flow-Statement-ppt#fullscreen:on
  22. 22. THANK YOU

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