Companies obtain capital through both long-term and short-term funds. Long-term funds like shares and debentures are expected to be invested in long-term assets like plants and buildings. Short-term funds such as overdrafts are meant for short-term needs like stock purchases and paying creditors. However, funds do not always move as expected and can shift from long-term to short-term uses or vice versa. Profits from core business operations also generate funds, while losses deduct from available funds. The cash flow statement analyzes movements of funds within a company.

1. Cash Flow Statement and other financial analysis
Companies obtain different types of capital. We can broadly categories them into long
term funds and short term funds. We know that whenever long term funds such as issue
of shares, preference shares, debentures and public deposits are issued they are expected
to be invested in long term profit generating assets such as purchase of plant and
machinery, building etc. If short term funds such as over drafts, cash credit are generated,
it is expected such funds should be employed in short term purpose such as purchase of
stock, payment to creditors etc. All long term funds are not fully utilized for long term
or all short term funds are utilized for short term. Invariably, there are movements of
funds which take place from long term to short term or short term to long term.
Funds are also generated from profit by doing basic functions of the organization by
buying and selling of goods and services or lost when compan