Cash Flow- Dr. Varadraj Bapat

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Presentation transcript:

Cash Flow- Dr. Varadraj Bapat Fund Flow Statement Cash Flow- Dr. Varadraj Bapat

Cash Flow- Dr. Varadraj Bapat Meaning The fund-flow statement is defined as ‘a statement which summarises, the sources from which funds were obtained and the specific uses to which the funds were put.’ Cash Flow- Dr. Varadraj Bapat

Cash Flow- Dr. Varadraj Bapat Sources Application Fund from Operation Sale of Fixed Asset Issue of Shares F U N D S Purchase of Fixed Asset Purchase of Investments Increase in Working Capital Cash Flow- Dr. Varadraj Bapat

Need for the Fund Flow Statement Profit and Loss A/c shows book profits for specific period of time and Balance sheet shows the financial position of the concern at particular point of time. It does not show the flow of funds (increase / decrease in funds) of concern during year. Hence separate fund flow statement need to be prepared. Cash Flow- Dr. Varadraj Bapat

Preparation of Fund Flow Statement Analysis of balance sheet enables to ascertain the changes in working capital and other major sources of finance and where these funds are employed. Profit and loss A/c is analysed to ascertain the funds from operating activities. Cash Flow- Dr. Varadraj Bapat

Cash Flow- Dr. Varadraj Bapat Funds from Operations Net Profit (After Tax) XX Adjust: Non-Cash Expenses Depreciation/ Amortisation Adjust: Non-operating Items Interest or Dividend Loss/Profit on sale of fixed asset Funds from Operation Cash Flow- Dr. Varadraj Bapat

Cash Flow- Dr. Varadraj Bapat Statement of Changes in Working Capital Particulars Current Year Previous Year Increase / Dec in W.C. A. Current Assets Stock Debtors Bank Total CAs Cash Flow- Dr. Varadraj Bapat

Cash Flow- Dr. Varadraj Bapat Particulars Curnt Year Prev Year Increase / Dec in W.C. B. Current Liabilities Creditors O/S Expenses Total CLs Working Capital (A-B) Cash Flow- Dr. Varadraj Bapat

Cash Flow- Dr. Varadraj Bapat Fund Flow Statement Inflows Rs. Funds from Operation XX Decrease in Working Capital Sale of Fixed Assets Sale of Investment Issue of Shares/ Debentures Non-Operating income Loan Taken Total Inflows Cash Flow- Dr. Varadraj Bapat

Cash Flow- Dr. Varadraj Bapat Fund Flow Statement Outflows Rs. Loss from Operations XX Increase in Working Capital Purchase of Fixed Assets Purchase of Investment Redemption of Shares/Debentures Non-Operating Expenses Dividend Paid Total Outflows Cash Flow- Dr. Varadraj Bapat