FUNDS FLOW Dr. Shete N.P

WHAT IS FUNDS FLOW STATMENT FUNDS : WORKING CAPITAL FLOW OF FUNDS: THE TERM FLOW MEANS CHANGE AND THEREFORE THE TERM FLOW OF FUNDS MEANS “CHANGES IN FUNDS” OR “CHANGES IN WORKING CAPITAL”. IN OTHER WORDS, ANY INCREASE OR DECREASE IN WORKING CAPITAL MEANS “FLOW OF FUNDS”.

Marketable investments Current assets Cash in hand and bank Marketable investments Accounts receivables Stock Prepaid exp. Fixed assets Goodwill Land and building Plant and machinery Long term investment Current liabilities Bank overdraft Outstanding expenses Accounts payable Fixed liabilities Share capital Reserve and surplus Debentures Long term loans Flow in fund Not flow in funds

USES OF FUNDS FLOW WHY THE LIQUED POSITION OF THE BUSINESS BECOMING MORE AND MORE UNBALANCED IN SPITE OF COMPANY IS MAKING MORE AND MORE PROFITS. WHERE HAVE THE PROFIT GONE WHAT WILL BE THE SOURCES FOR DIVIDEND IF COMPANY IS NOT EARNING SUFFICIENT PROFIT WHAT ARE THE SOURCES OF REPAYMENT OF THE LOAN TAKEN HOW MUCH FUNDS GENERATION THROUGH NORMAL BUSINESS OPERATION.

IN WHAT WAY THE MANAGEMENT HAS UTILIZED THE FUNDS IN THE PAST AND WHAT ARE GOING TO BE LIKELY USES OF FUNDS ?

Funds flow Analysis This statement is based on the ‘working Capital’ concept of funds. It measures the inflows and outflows of working capital resulting from different transactions. Funds flow statement measures and presents in an analytical manner the summarized version of the numerous flows of funds for a specific period. ‘Funds Flow’ is the change in ‘Working Capital’

Schedule Of Changes In Working Capital 4885.64 4885.6 7186.7 TOTAL 3005.02   3005 Increase In Working Capital 4181.7 CA - CL 6290.1 8170.7 Total 44.85 4477.4 4522.2 Bills for collections 645.02 1236 1881 Short term borrowings 1190.75 576.72 1767.5 Other liabilities Current liabilities 10472 15357 1220.6 302.3 1522.9 Bills receivables 3139.9 6696.6 9836.5 Loans & adv. 486.95 2917.5 3404.4 Investments 38.25 555.36 593.61 Cash & bank bal. Decrease Increase 2005 2004 Current assets

CALCULATION OF FUNDS FROM OPERATION 220.07   FUNDS FROM OPERATION 321.03 OPENING BAL. OF P&L A/C NIL (-) NON FUND CR. 541.1 197.79 195.23 Transfer Of R/S 2.56 Depreciation On Fixed Assets (+) Non Fund Items 343.31 Closing Balance Of P&L A/c

Funds Flow Statement 3491.02 TOTAL 966.37 BORROWINGS 2253.02    TOTAL 966.37 BORROWINGS 2253.02 LONG TERM LOANS 2.56 SALE OF FIXED ASSET 486 Investments 220.07 FUNDS FROM OPERATION 3005.02 Increase In WC 49 ISSUE OF CAPITAL AMT. APPLICATION SOURCES

Cash Flow Analysis Cash flow includes cash inflows and outflows – cash receipts and cash payments during a period. A cash flow statement is a statement which portrays the changes in cash position between two accounting periods. It helps in taking short term financial decisions and also in the preparation of cash budget for the next year.

How Cash Flow Differ From funds Flow ? Unlike funds flow Cash Flow does not has non-cash items. It comprises only those entries in which cash has come in or gone out.

(Less) Non-cash Incomes 80.80 Provisions 33.86 Amortizations 12.52 Statement Of Cash From Operations 449.36 Cash From Operations   43.19 Profit on sold Assets (Less) Non-cash Incomes 80.80 Provisions 33.86 Amortizations 12.52 Interest Payable 35.15 Depreciation (Add) Non-cash Expenses 330.22 Net Profit Before Tax

Outflow Of Cash Inflow Of Cash Cash Flow Statement 5684.13   1194.80 Trade And Other Receivables 593.61 Closing Cash Balance 449.36 Cash From Operations 12.52 Interest Paid 2253.02 Long Term Borrowings 529.80 Purchase Of Investments 42.85 Sale Of Investments 32.91 Purchase Of Fixed Assets 43.50 Sale Of Fixed Assets 2.80 Payments For Extraordinary Items 1220.34 Deposits 137.00 Direct Taxes Paid 1119.70 Trade Payables 3180.69 Advances 555.36 Opening Cash Balance Outflow Of Cash Inflow Of Cash