The document discusses sources and uses of funds analysis. It defines sources and uses of funds statements and explains three conceptions of funds: cash, working capital, and the balance sheet approach. Sources of funds are transactions that increase liabilities or equity, while uses of funds are transactions that decrease liabilities or equity or increase assets. The document also provides an example and assignment for preparing sources and uses of funds statements.

1. Financial Management
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4
Class
Jimmi Sinton
Te a c h i n g S e r i e s

2. 4-14 Analisis Sumber dan Penggunaan Dana
Topics
Materials
Covered
………… ……
Definition of sources and uses of
funds statements
Please read
each material
Definition of fund in fund
before class statements analysis
and rehearse it Fund in term of cash
after class Fund in term of working capital
J i m m i S ei ni t o n
T e a c h i n g
S r e s Financial Management

3. 4-14 Analisis Sumber dan Penggunaan Dana
• Includes important noncash transactions while the cash flow
statement does not.
• Is easy to prepare and often preferred by managers for
analysis purposes over the more complex cash flow
statement.
• Helps you to better understand the cash flow
statement, especially if it is prepared under the “indirect
method.”
• The statement was seen as necessary to summarise investing
and financing activities
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T e a c h i n g
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4. 4-14 Analisis Sumber dan Penggunaan Dana
A summary of a firm’s changes in financial position from
one period to another; it is also called a sources and uses of
funds statement or a statement of changes in financial
position.
Has been replaced by the cash flow statement (1989) in
US audited annual reports.
J i m m i S ei ni t o n
T e a c h i n g
S r e s Financial Management

5. 4-14 Analisis Sumber dan Penggunaan Dana
All of the firm’s investments and claims
against those investments.
Extends beyond just transactions
involving cash.
J i m m i S ei ni t o n
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6. 4-14 Analisis Sumber dan Penggunaan Dana
Definition of Funds
An increase in funds is a “source” of funds
A decrease in funds is a “use/application” of
funds
There are three conceptions of funds:
Cash
Working capital
J i m m i S ei ni t o n
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7. 4-14 Analisis Sumber dan Penggunaan Dana
Definition of Funds
Cash
Where funds are interpreted as cash, any transaction
that increases cash is a source of funds and any
transaction that reduces cash is a use or an application
of funds
Cash flow statements are prepared for use monitoring
an entity’s cash movements
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8. 4-14 Analisis Sumber dan Penggunaan Dana
Definition of Funds
Sources of cash
Decrease in assets
Increase in liabilities
A L
S – +
Uses of cash
Increase in assets U + –
Decrease in liabilities
J i m m i S ei ni t o n
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9. 4-14 Analisis Sumber dan Penggunaan Dana
Definition of Funds
Working capital
Working capital is measured as current assets less current
liabilities
An increase in working capital is a source of funds
A decrease in working capital is an application (or use) of
funds
J i m m i S ei ni t o n
T e a c h i n g
S r e s Financial Management

10. 4-14 Analisis Sumber dan Penggunaan Dana
Definition of Funds
An increase in working capital occurs when there is an
increase in total current assets without a corresponding
increase in total current liabilities
A decrease in working capital occurs in the opposite
circumstances
The difference between sources and uses of working capital
will be equal to the change in working capital between
successive balance sheets
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11. 4-14 Analisis Sumber dan Penggunaan Dana
Definition of Funds
Any transaction that increases liabilities or equity is a source
of funds
Any transaction that reduces liabilities or equity is a use of
funds
Any transaction that increases assets is a use of funds
Any transaction that reduces assets is a source of funds
J i m m i S ei ni t o n
T e a c h i n g
S r e s Financial Management

12. 4-14 Analisis Sumber dan Penggunaan Dana
Assignment 1
Megatron Inc,
Financial Statement
For 2009 and 2010
2009 2010
Assets
Cash and cash equivalent 140,000 31,000
Account Receivable 346,000 528,000
Inventories 432,000 683,000
Current Assets 918,000 1,242,000
Net Fixed assets 1,113,000 1,398,000 Instruction
Total 2,031,000 2,640,000
Prepare a source and use of funds
Liabilities and equity statements for 2009 and 2010
Account Payable 413,000 627,000
Accruals 226,000 314,000
Bank Borrowings 100,000 235,000
Current Liabilities 739,000 1,176,000
Common Stock 100,000 100,000
Retained Earnings 1,192,000 1,364,000
Total 2,031,000 2,640,000
Note: Depreciation was $189,000 for 2010 and no dividends were paid
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13. 4-14 Analisis Sumber dan Penggunaan Dana
Assignment 2
Find another example of question about sources and uses of
funds analysis. You are asked to answer it according to the
asked question
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