Cash flow analysis is a valuable aid to the financial executive and creditors for evaluating the uses of funds

by the firm and in determining how these uses were financed. A cash flow statement indicates where funds came from and where it was used during the period under review. They are important tools for communication and Very helpful for financial executives in planning the intermediate and financing of the Firm. Cash flow statement is a statement of Cash flow. Cash flow signifies the movement of cash in and out of a business concern. In flow of cash is a known as source out flow of cash is called use of cash. The term cash here stands for and bank balance. Cash flow Statement shows the changes in position between two balance sheet dates. It provides the details in respect of cash generate and applied during the accounting period. The Transactions which increase the cash position of the business are known as in flows of cash (Ex: Sales of current and fixed assets, issue of shares and debentures etc.) The transactions which decrease the cash position are known as out flows (Ex: Purchase of current and fixed assets, redemption of debentures, and performance says and other long term depicts) Cash flow statements constants on transactions that have a direct impact on cash. This statement depicts factors responsible for such in flow and out flow of cash. In brief, cash flow statement summarizes process of changes in cash position between dates of balance sheets. A cash flow statement is like receipt and payments account in summary form. The net flow cash is equal to net profit but this cannot be true in all cases because of the presence of non-cash from operations certain adjustments are to be made to the net profit as disclosed by profit and loss account. There are three methods of determining cash from operations namely. 1. Cash sales method. 2. Net Profit/Net loss method. 3. Cash from operations: Cash sales – Cash purchases – Cash operating expenses.

1. To know about the future plans of the company depend upon the

cashflow analysis of the company. 2. This study helps in finding the comparison between the past and performance of the company. 3. This study also helps up the goals and objectives for future in the content of cash flow control.

This analysis is important for the management and also for outside dealing with organization is moving . 5.4. This analysis to these statements will provide the decision maker to understand strengths and weaknesses of the firm.

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