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Fund flow statement

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Fund flow statement

  1. 1. Presented by: Ritesh Kumar Tiwari
  2. 2. Fund  Fund means Working Capital. Working Capital
  3. 3. Fund Flow Statement Fund flow statement is –  a statement shows the changes in funds  b/w two balance sheet of two different dates.
  4. 4. Format of Fund Flow Statement Fund Flow Statement (As on…………..) Sources of Funds Amount Application of Funds Amount Issue of share capital ……. Redemption of pref. share …….. Issue of debenture ……. Redemption of debenture …….. Raising of long term loan ……. Payment of long term loan …….. Sales of fixed assets ……. Purchase of fixed assets …….. Interest received ……. Interest paid …….. Dividend received ……. Dividend paid .……. Refund of Taxes ……. Payment of Taxes …….. Decrease in working capital ……. Increase in working capital …….. Fund from operation ……. Fund lost in operation .……. TOTAL …….. TOTAL ……..
  5. 5. Importance of Fund Flow Statement  Identification & Analysis of changes in working capital  Evaluation of firm’s financing  Knowing the overall creditworthiness of a firm  An instrument for allocation of resources
  6. 6. Statement of • Increase in Working Capital Changes in • Decrease in working Capital Working Capital Adjusted Profit & Loss A/c Fund Flow Statement • Funds from Operation (Profit) • Funds lost in operation (Loss) • Sources of Funds • Application of Funds
  7. 7. Example:- The Balance Sheet of ABC Ltd. at the end of 2006 and 2007 are as 31 March 2007 31 March 2006 follows: Liabilities: Accounts Payable 15,000 20,000 Notes Payable 25,000 10,000 Other Current Liabilities 10,000 15,000 ------ 20,000 80,000 1,10,000 ------ 10,000 50,000 50,000 1,80,000 2,35,000 Cash 10,000 5,000 Marketable Security 10,000 ------- Inventory 70,000 1,05,000 Receivables 30,000 40,000 Fixed Assets 1,00,000 1,40,000 Accumulated Depreciation (-)40,000 (-)55,000 1,80,000 2,35,000 6 % Bonds Retained Earning Mortgage Shares TOTAL Assets: TOTAL
  8. 8. You are required to prepare a Statement of Changes in Working Capital and Fund Flow Statement. Statement of Changes in Working Capital Particular 2006 2007 Effect on Working Capital Increase Current Assets: Decrease Rs. Rs. Rs. Rs. Cash 10,000 5,000 ----- 5,000 Marketable Security 10,000 ----- ----- 10,000 Inventory 70,000 1,05,000 35,000 ----- Receivable 30,000 40,000 10,000 ----- 1,20,000 1,50,000 Accounts Payable 15,000 20,000 ----- 5,000 Notes Payable 25,000 10,000 15,000 ----- Other Current Liabilities 10,000 15,000 ----- 5,000 50,000 45,000 ----- 35,000 60,000 60,000 Current Liabilities: Net Increase in Working Capital(Balance) TOTAL
  9. 9. Adjusted Profit & Loss Account Particular To Depreciation (55,000 – 40,000) To Closing Balance of P & L A/c Amount 15,000 Particular By Opening Balance of P & L A/c 1,10,000 By Fund from Operation (Balance) 1,25,000 Amount 80,000 45,000 1,25,000
  10. 10. Fund Flow Statement ( As on 31 march 2007) Sources Amount Application Amount Mortgage 10,000 Purchase of Fixed Assets 40,000 6 % Bonds 20,000 Net Increase in Working Capital 35,000 Funds from Operation 45,000 75,000 75,000
  11. 11. Thank You

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