The fund flow statement tracks cash movements in and out of financial assets over specific periods, highlighting liquidity, capital utilization, and aiding in trend analysis and strategic planning. It supports decision-making for investors and creditors by assessing financial stability and risks. Key steps in preparing the statement include adjusting profit and loss accounts and changes in working capital.

1. STATEMENT OF
FUND FLOW

2. MEANING
 Fund flow is the cash that flows into and
out of various financial assets for
specific periods of time.
 It's usually measured on a monthly or
quarterly basis.
 Fund flow doesn't measure the
performance of any single asset but
emphasizes how cash is moving.

3. IMPORTANCE OF FUND FLOW STATEMENT

4. 1. Liquidity assessment
Outlining the sources and uses of funds helps the statement provide insights into
the organization’s ability to meet short-term financial obligations and operational
needs.
2. Capital utilization efficiency
This financial document offers a detailed breakdown of fund allocation across
various activities, including investments and working capital. The analysis is
instrumental in optimizing resource allocation and enhancing financial
performance.
3. Trend analysis
The statement facilitates trend analysis by presenting a historical perspective of
fund movement over different periods. Stakeholders can identify patterns and
trends to predict future financial activities.

5. 4. Strategic decision support
As a comprehensive financial document, it provides management
and investors with a clear understanding of the economic drivers
shaping the organization’s growth.
5. Financial performance evaluation
The analysis provided by the statement goes beyond traditional
profit and loss considerations. It offers a better understanding of the
financial dynamics that impact an organization’s bottom line.

6. USES OF FUND FLOW STATEMENT

7. 1. Strategic planning
The statement offers valuable insights into the allocation of funds across different
activities. The information assists management in aligning financial strategies
with organizational goals.
2. Investor decision-making
Investors rely on the statement to decide about a company’s financial stability
and growth potential. Understanding the movement of funds allows investors to
check the organization’s ability to generate returns and meet obligations.
3. Creditworthiness assessment
Scrutinizing the sources and uses of funds helps creditors gauge the company’s
ability to meet its financial obligations.

8. 4. Risk management
The statement helps identify potential financial risks and mitigate
strategies. It allows organizations to navigate challenges and
uncertainties better.
5. Budgetary planning
Organizations use the fund flow statement for budgetary and
financial planning, as it offers a granular account of expected cash
outflows and inflows.

9. STEPS IN PREPARING FUND FLOW STATEMENT
 Preparing the statement of changes in working capital
 Preparing the adjusted profit and loss account
 Fund flow statement

10. STATEMENT OF CHANGES IN WORKING
CAPITAL

11. ADJUSTED PROFIT AND LOSS ACCOUNT

12. FUND FLOW STATEMENT FORMAT

13. THANK YOU…