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Sagar Phul Shruti Kashyap Deepshikha Yadav Lincy Kurian Tingle Thomas
FUND FLOW STATEMENT
• A Fund Flow Statement is a statement which shows the inflow and outflow of funds between two dates of a balance sheet. So, it is known as the statement of changes in financial position. • Balance sheet shows the financial position and inflow and outflow of funds that affect it. • In company level business, it is very necessary to prepare fund flow statement to know what the sources are and what are the applications of funds between two dates of balance sheet. • Generally, it is prepared after getting two years balance sheet.
OBJECTIVES OF FUNDS FLOW STATEMENT
analysis of the flow of liquid funds can be very useful in making decisions concerning liquidity. full understanding of a business’s affairs requires the identification of the changes or movements in the assets, liabilities and capital for the year, and the resultant effect on the liquid resources. A profit and loss account and balance sheet does not specifically disclose this information.
and how the financial resources have been used. To show the manner in which the operations have been financed. . It is useful in planning the retirement of debt. It is useful in deciding how fixed assets should be financed. Various ways to improve the networking capital position can be decided. If focuses attention on resources available for capital investment. They provide useful guide to creditors & lenders.
• An Income Statement Is A Company’s Financial Statement That Indicates How The Revenue Is Transformed Into The Net Income .
• Helps The Investors & Creditors Determine The Past As Well As Future Financial Performance Of An Enterprise • Displays The Revenues Recognized For A Specific Period & The Cost/Expenses Charged Against These Revenues .
Relevant Items That Cannot Be Reliably Measured Are Not Reported Example: Brand Equity & Loyalty Some Numbers Depend On Judgement & Estimates Example: Depreciation Expenses (which depends on estimated useful life) .
FUNDS FLOW STATEMENT INCOME STATEMENT Deals With Financial Resources Required For Running Business Activities A Funds Flow Statement Matches The Funds Raised & Funds Applied During A Particular Period Discloses The Results Of The Business Activities It Matches The Incomes Of A Period With The Expenditure Of That Period .
SOURCES AND APPLICATIONS OF FUNDS It is necessary to find the sources and applications of finance for preparing a funds flow statement. SOURCES OF FINANCE:Can be both internal and external sources. .
. However certain adjustments are required in the figure of net profit for finding out the real funds from operations.Funds from operations is the only internal source of finance.
1. 4. DEPRECIATION ON FIXED ASSETS.ADD THE FOLLOWING ITEMS AS THEY DON’T RESULT IN OUTFLOW OF FUNDS. PROVISION FOR TAXATION AND PROPOSED DIVIDEND. . 2. IF ALREADY DEDUCTED BEFORE ARRIVING AT THE FIGURE OF NET PROFIT. ETC. BUT TAX OR DIVIDENDS ACTUALLY PAID AND INTERIM DIVIDEND PAID ARE TAKEN AS APPLICATION OF FUNDS. ETC. TRANSFER TO GENERAL RESERVE. 5. WRITTEN OFF. LOSS ON SALE OF FIXED ASSETS. CONTRIBUTION TO DEBENTURE REDEMPTION FUND. 3. PRELIMINARY EXPENSES ON GOODWILL.
SO WILL BE SHOWN UNDER SEPARATE HEADS AS SOURCES OF FUNDS IN THE FFS.DEDUCT THE FOLLOWING ITEMS AS THEY DO NOT INCREASE FUNDS1. THOUGH THEY INCREASE FUNDS. PROFIT ON REVALUATION OF FIXED ASSETS. 2. 3. NON OPERATING INCOMES SUCH AS DIVIDENDS RECEIVED OR ACCRUED DIVIDEND. RENT RECEIVED OR ACCRUED RENT. THEY ARE NON OPERATING INCOMES. . REFUND OF INCOME TAX. PROFIT ON SALE OF FIXED ASSETS SINCE THE FULL SALE PROCEEDS ARE TAKEN AS A SEPARATE SOURCE OF FUNDS AND INCLUSION HERE WILL RESULT IN DUPLICATION.
SALE OF LAND.SUCH AS DEBENTURES. THERE WILL BE FLOW OF FUNDS UNLESS THE DEBENTURES HAVE BEEN ISSUED IN CONSIDERATION OF SOME FIXED ASSETS. . LONG TERM INVESTMENTS WILL RESULT IN GENERATION OF FUNDS. BORROWINGS FROM FINANCIAL INSTITUTIONS INCREASE THE WORKING CAPITAL AND THEREFORE. BUILDINGS. 2. SALE OF FIXED ASSETS. 3.1.. ISSUE OF SHARES FOR CASH OR FOR ANY OTHER CURRENT ASSET RESULTS IN INCREASE IN WORKING CAPITAL. FUNDS FROM LONG TERM LOANS.FUNDS FROM INCREASE IN SHARE CAPITAL. .
PAYMENT OF FIXED LIABILITIES. PURCHASE OF FIXED ASSETS. 1. .THE USES TO WHICH FUNDS ARE PUT ARE CALLED APPLICATIONS OF FUNDS. PAYMENT OF TAX LIABILITY. 4. 2. PAYMENT OF DIVIDENDS. 3.
Gives detailed as well as accurate information about the changes in the financial position of the company as compared to the changes in financial positions as shown by the traditional fund flow statement.STATEMENT OF CHANGES IN FINANCIAL POSITION Extension of “Funds Flow Statement”. .
. A statement which summarises for the period the resources are made available to finance the activities of an enterprise and the uses to which such resources have been put.DEFINITIONS A statement disclosing changes in the firm‟s total financial resources.
Changes in the firm‟s working capital position.THE STATEMENT OF CHANGES IN FINANCIAL POSITION MAY INVOLVE : Changes in the firm‟s cash position. Changes in the firm‟s total financial resources position. .
The possibility of expanding or reducing operating capacity can be addressed by analyzing the funds provided by operations.IMPORTANCE The information provided can be compared with the cash budget to assist in the prediction of future cash flow. . The quality of income can be better assessed because estimates are not included in the SCFP and it is easier to see what was received and what was spent. The financial flexibility and liquidity of the company can be analyzed.
FORMAT OF FUNDS FLOW STATEMENT SOURCES Funds from operations Issue of share capital Issue of debentures Long-term loans Sale of fixed assets Dividend received Non-trading income **Decrease in working capital (balancing figure) APPLICATIONS Loss from applications Redemption of preference shares Redemption of debentures Repayment of long-term loans Dividend paid Purchase of fixed assets Payment of dividend/tax *Increase in working capital (balancing figure) .
ISSUE OF SHARES SALE OF FIXED ASSETS LONG TERM BORROWINGS OPERATIONAL PROFIT FUNDS REDEMPTION OF PREF. SHARES PURCHASE OF FIXED ASSETS PAYMENT OF LONG TERM LOANS OPERATION AL LOSS PAYMENT OF TAX/ DIVIDEND .
CASE STUDY ON TATA MOTORS .
and among the top three in passenger vehicles with winning products in the compact. and the world's third largest bus manufacturer.133 crores (USD 27 billion) in 201011. best in the products we deliver. and best in our value system and ethics. The Company is the world's fourth largest truck manufacturer. The Company's over 25. midsize car and utility vehicle segments.1.23.About the company…." .000 employees are guided by the vision to be "best in the manner in which we operate. It is the leader in commercial vehicles in each segment. Tata Motors Limited is India’s largest automobile company. with consolidated revenues of Rs.
In May 2009. which signifies a first for the global automobile industry. as planned. The Tata Nano has been subsequently launched. the Tata Nano. In their power. in keeping with its pioneering tradition. the Nano brings the comfort and safety of a car within the reach of thousands of families. by unveiling its new range of world standard trucks called Prima. Tata Motors unveiled its People's Car. carrying capacity. which India and the world have been looking forward to. speed. . operating economy and trims. A development. Tata Motors ushered in a new era in the Indian automobile industry. in India in March 2009. they will introduce new benchmarks in India and match the best in the world in performance at a lower life-cycle cost.Some Achievements…… In January 2008.
The goal of environment protection is achieved through tree plantation. conserving water and creating new water bodies and. In health. The Company's support on education and employability is focused on youth and women. education. Tata Motors today is etching a refulgent future. . last but not the least. Tata Motors is committed to improving the quality of life of communities by working on four thrust areas – employability. It has developed electric and hybrid vehicles both for personal and public transportation. The activities touch the lives of more than a million citizens.And More…… Tata Motors is equally focused on environment-friendly technologies in emissions and alternative fuels. health and environment. our intervention is in both preventive and curative healthcare. With the foundation of its rich heritage. by introducing appropriate technologies in our vehicles and operations for constantly enhancing environment care.
029. Depreciation (including Lease Equalization) C.36 61.69 589.82 1.240. Credit for Dividend Distribution Tax of Subsidiary Companies F.811. Net deferred tax charge E.05 2010-11 2009-10 376. Profit after tax B.30 161.26 34.356. Funds generated from operations A.’2011 SOURCES OF FUNDS 1.00 2.FUNDS FLOW STATEMENT of Tata Motors For the year ending 31st March.46 (325.81) . Exchange gain (net) on Long term Foreign currency monetary items deferred consequent to amendment to AS-11 1.08 1. Provision / (Reversal) for diminution in value of investments (net) D.
57 3.01 1.SOURCES OF FUNDS G.351.58 .726.740.794.19 1.32 3.555.41 2. Marked to Market Exchange loss on Forward contracts transferred to Hedging Reserve Account on adoption of principles of hedge accounting under AS30 TOTAL 2.94 1.71 1. Proceeds from FCCN. (a) Decrease in Working Capital (b) Decrease in Finance receivables 2010-11 - 2009-10 132. Warrants and Convertible Debentures converted into Ordinary Shares and premium thereon 6. Proceeds from issue of Global Depository Shares 4. Proceeds from QIP issue 5.145.07 3.76 366.393. Proceeds from Rights issue of Ordinary shares and „A‟ Ordinary shares 3.493.
Increase in short term deposits with banks 321.82 490.SOURCES OF FUNDS 7.29 2009-10 3. Decrease in short term deposits with banks TOTAL APPLICATION OF FUNDS 9.396. Investments made (net of sales) 11.460.96 804. Increase in Borrowings (net of repayments) 8.35 14.81 2010-11 2.33 10.950.429.53 2009-10 2.67 .873. Capital Expenditure (net) 2010-11 8.66 9.31 71. Payment of Redemption Premium on NCD 12.076.
467. Dividends (including tax thereon) 1.81 14.000.03 991.076.94 15. Miscellaneous Expenditure (to the extent not written off or adjusted) and utilization of Securities Premium Account TOTAL 193.57 - - 14.53 .20 290.APPLICATION OF FUNDS 2010-11 2009-10 13. (a) Increase in Working Capital (b) Increase in Finance receivables 3.77 8.950.
BALANCE SHEET WHAT THE COMPANY OWNED COMPAN Y COMPANY TATA MOTOR’S GROUP As at March 31. NET FIXED ASSETS 2.63) 37. 2010 As at March 31.544.865.21 - 43. 2011 TATA MOTOR’ S GROUP As at March 31.624.10 33. 2011 1.04 22.305.69 As at March 31.12 425.87 2.164. TOTAL ASSETS (NET) 17.584.81 45.436. FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT (NET) 6.90 161.65 54.475.219.506. NET CURRENT ASSETS 7.12 38.10 724.61 .493.299.21 (5.63 22.068.051.97 - (2.34 3. 2010 16.422.98) 4.79 2.336. DEFERRED TAX ASSETS (NET) 5.26 632. GOODWILL 3.33 3. INVESTMENTS 4.935.
2011 TATA MOTOR’ S GROUP As at March 31.096.15 As at March 31.16 2.579.30 - 16. NET WORTH 3. LOANS 2. 2011 1.791.13 1. DEFERRED TAX LIABILITY (NET) 2.60 - 5. 2010 As at March 31.013. 2010 35.171.75 20.48 213.898.206.47 - 32. MINORITY INTEREST 4.47 246.023.60 .54 14.108. FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE ACCOUNT (NET) 15.594.41 19.965.16 2.3 6 8.023.WHAT THE COMPANY OWED COMPANY COMPANY TATA MOTOR’S GROUP As at March 31.51 191.
312.PROFIT AND LOSS ACCOUNT COMPAN COMPAN TATA Y Y MOTOR’S 2010-2011 2009GROUP 2010 2010-2011 TATA MOTOR’ S GROUP 20092010 1.419.853.42 35.286.567.10 127.771. INCOME SALE OF PRODUCTS AND OTHER INCOME FROM OPERATIONS LESS : EXCISE DUTY 52.25 95.32 3.040.05 4.4184.108.40.206 0 DIVIDEND AND OTHER INCOME 183.46 2.97 38.45 89.9 1 .519.26 48.364.133.51 48.05 123.593.6 2 4.095.50 123.17 92.793.048.61 1.223.12 94.37 37.72 1.
38) (1.01) 112.294.17 1.67 962.84 920.71 259.751.77 498.785.17 3.216.20 EMPLOYEE COST PRODUCT DEVELOPMENT EXPENDITURE 2.437.COMPANY 2010-2011 COMPAN Y 2009-2010 TATA MOTOR’S GROUP 2010-2011 9.027.64 4.42 (231.74 10.45 34.77 1.75) .87 1.829.96 2.73 3.239.52 1.616.60 90.045.51 2.033.02 106.196.13 2.12 46.70) (589.655.522.360.46) (1.99 147. PROFIT BEFORE TAX 1.143.836.103.005.342. TAX EXPENSE (384.54 4.20 2.03 DEPRECIATION / AMORTISATION INTEREST AND DISCOUNTING CHARGES EXCEPTIONAL ITEMS .887.13 144.49 TATA MOTOR’S GROUP 2009-2010 8.789.LOSS / (GAIN) TOTAL EXPENDITURE 3.
273.240. SHARE OF MINORITY INTEREST (48.82 2.571.811.62 2.33) 7.811.89 5.08 101.52) (30.08 9.240.516.79 6. PROFIT FOR THE YEAR 1.35 84.06 .COMPAN Y 20102011 COMPAN Y 20092010 TATA MOTOR’S GROUP 2010-2011 TATA MOTOR’ S GROUP 20092010 2.82 2. SHARE OF PROFIT / (LOSS) IN RESPECT OF INVESTENTS IN ASSOCIATE COMPANIES 8.50 9.220. PROFIT AFTER TAX 1.
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