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Ppt Fund Flow

Ppt Fund Flow

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Published by: bhargavik2002 on Jun 07, 2010
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Meaning of Fund Flow.

ØFund flow statement consist with two word fund and flow. ØFund means cash or working capital or all resource of fund and flow means change . ØFund flow refers to change in financial position in beginning of financial period to end of year . ØThus, Fund Flow means transfer of values from one asset to another, from one liability to another, from one asset to liability or vice-versa. ØSo Fund Flow refers to increase or decrease in net working capital.

  

Procedure of Preparation of Fund Flow Statement

Ø The changes which occurs in the current accounts are reflected in a statement known as ‘schedule of changes in working capital’ . Ø The similar changes in non current accounts are shown in ‘Fund Flow Statement’.

Ø Therefore, following 3 statements under this techniques  are important.
 

1. Statement or Schedule of Changes in Working Capital. 2. Statement of Sources and Uses of Funds or Funds Flow Statement. 3. Schedule of Funds from Operations.

Schedule of Changes in Working Capital.
 

Working capital will increase : When there is an increase in current asset and decrease in current liabilities. Working capital will decrease: When there is a decrease in current asset & increase in current liabilities.


 

Ø Net increase in working capital is treated as use of  funds & the net decrease in working capital is  treated as source of funds.

Statement or Schedule of Changes in Working Capital.
Previous Year Current Year
Effect on

Particulars (A) Current Assets Cash at bank

Working capital Decrease Rs.

Increase Rs.

Cash in hand Debtors Total (A) (B) Current Liabilities Bank overdraft

Creditors Bills payable Total (B) Net Working Capital (A-B) Increase / Decrease in

Statement of Sources & Uses of Funds.
ØThis statement reveals resources from which funds were obtain by the firm and the specific uses to which such funds were applied.

ØThis fund flow statement has two parts :

1.Sources of fund. 3.Application of fund

Fund Flow Statement
Sources of Fund
Fund from operation Issue of share Issue of debenture long term loans Sale of fixed assets / Investment Decrease in working capital (if any) Amount

Uses Of Funds
Loss from operation Redemption of preference shares Redemption of debentures Purchase of fixed assets / Investments Payment of dividend & taxes Increase in working capital (if any)


Schedule of Funds from Operations

Profit or gain on sale of fixed asset Dividend received Interest received of investment Profit on revaluation of asset.


Depreciation Loss on sale of fixed assets Under writing commissions Discount on issue of shares & debentures Preliminary expense written off Goodwill written off

Fund from operation.

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