Downloaded 1,887 times
Uploaded byRitesh Tiwari
Fund flow statement
This document presents a fund flow statement example for ABC Ltd. between 2006 and 2007. Key points: - A fund flow statement shows changes in funds between two balance sheet dates by listing sources and applications of funds. - For ABC Ltd., sources of funds included taking a mortgage, redeeming bonds, and funds from operations. Applications included purchasing fixed assets and increasing working capital. - A statement of changes in working capital and adjusted profit and loss account were also prepared to determine the increase in working capital and funds from operations. - The completed fund flow statement for ABC Ltd. balanced sources of funds totalling Rs. 75,000 with applications of funds.
More Related Content
Similar to Fund flow statement
Fund flow statement
- 1.
- 2. Fund Fund meansWorking Capital. Working Capital
- 3. Fund Flow Statement Fundflow statement is – a statement shows the changes in funds b/w two balance sheet of two different dates.
- 5. Format of FundFlow 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 ……..
- 6. Importance of FundFlow 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
- 7. 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
- 8. Example:- The BalanceSheet 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
- 9. You are requiredto 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
- 10. 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
- 11. 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
- 12.