A Fund Flow statement is basically the net value of all the cash inflows and out flows of various

financial assets. It is measured on monthly or quarterly basis by a company. Fund Flow statements tells the investors and market analysts ways to gauge the s entiments of the investors within specific asset class or the market as a whole.

First Step Making of statement of Changes of Working Capital For making of fund flow statement. It is very necessary to make statement of cha nges of working capital. Because net increase in working capital is use of fund and net decrease in working capital is source of fund. So, it is duty of account ant to make statement of changes of working capital. Making of statement of chan ges working capital is very easy and simple. We take two balance sheets, one is current year balance sheet and other is previ ous year balance sheet. Then we separate current assets and current liabilities. If current assets are more than previous year current assets, it means increase in working capital. If current assets are less than previous year current assets, it means decrease in working capital. Because, relationship between current assets and working cap ital is positive and if any changes in current assets, working capital will chan ge in same direction. If current liabilities are more than previous year current liabilities, it means decrease in working capital. If current liabilities are less than previous year current liabilities, it means increase in working capital. Relationship between working capital and current l iabilities are inverse. Statement or schedule of changes in working capital -----Particular------ ? previous year ? Current year ? Effect on working capital -----------? Increase ? Decrease -----Current Assets Cash in hand Bills receivable Sundry debtors Temporary investments Stocks / inventories Prepaid expenses Accrued incomes -----Total current assets------ ?xxxx ? xxxxx? ------ -----Current liabilities Bills payables Sundry creditors Bank overdraft

 Short term advances Dividends payables Provision for taxation -----Total current Liabilities ------?xxxx ?xxxx ? ------ -----Working capital CA- CL -----Net increase or decrease in working capital = Increase in working capital Decrease in working capital