Submitted in partial fulfillment of the requirement For the award of the Degree Of



Reg. No.: 07751E0054 Under the guidance of

Assistant Professor, Dept of M.B.A.

SREENIVASA INSTITUTE OF TEHNOLOGY AND MANAGEMENT STUDIES (Affiliated To Jawaharlal Nehru Technological University, Hyderabad) #74, Thimma Samudram, Bangalore ±Tirupati Bye-Pass Road Chittoor ± 517 128 2007-2009

Sreenivasa Institute of Technology and Management Studies
(Affiliated to Jawaharlal Nehru Technological University, Hyd) Murukambattu, CHITTOOR ± 517 127

This is to certify that the project report entitled ³A STUDY ON FUNDS FLOW ANALYSIS OF FOODS & INNS LTD, CHITTOOR.ana´ submitted by Mr.N. MANJUNTH(07751E0054) in partial fulfillment of the requirement for the award of the degree of ³Master of Business Administration´ under JNTU, Hyderabad, is a record of independent work under taken by him/her during the academic year 2008-2009. This project report has not been submitted earlier either in part or whole for the award of any other degree/diploma of any university.




I, N. Manjunath declare that the study conducted on ³A STUDY OF FUNDS FLOW ANALYSIS OF FOODS & INNS LTD, CHITTOOR´ is submitted by me to the department of business management, Sreenivasa Institute of Technology And Management Studies (JNTU), is of my own and is not submitted to any university or published at any time before.


N.MANJUNATH Reg. No.: 07751E0054

I am very much grateful to FOODS & INNS LTD for allowing me to carry out my project work. I am thankful to D.S.N.MURTHY (Financial Manager) for giving me the permission to do my project work in Foods & inns Ltd. I would like to thank our principal Dr. T. SAIRAMA M.E., PhD, for his valuable guidance and enthusiasm shown to me. I owe a special thanks to our Head of the Department, SUBRAHMANYAM, M.B.A., PhD I would like to express my deep gratitude to my guide BINDU, M.F.M, for her guidance and motivation. Prof.S.E.V.

Mrs. T. HIMA

(N.MANJUNATH) Reg. No.: 07751E0054

Funds flow statement summarizes for a particular period the resources made available to finance the activities of an enterprise and the uses to which such resources have been put. Funds flow statement is based on accrual concept of profit. The Company prepares a statement of funds flow to cater Purchase of fixed assets and investments, redemption of debentures and preference shares and repayment of loans, payment of dividend, payment of tax, and increase in working capital. It is the responsibility of the organization to maintain a standard level of funds flow neither excess or deficit.


Management of funds is an important aspect of financial management. Management of funds acts as the primary concern whether it may be in a business undertaking or in an educational institution. Financial management, which is simply meant dealing with management of money matters.

cost and control. 5. PROCUREMENT OF FUNDS 1.According to Phillippatus. cost and control. As funds can be obtained from different sources so procurement of funds is considered as an important problem of business concerns. sources and uses of funds. 2. summary of financial operations. "Financial management is concerned with the managerial decisions that result in the acquisition and financing of short term and long term credits for the firm". The term flow of funds means transfer of economic and values from one asset of equity to another. where got. ³A statement of sources and applications of funds is a technical device designed to analyze the changes in the financial condition of a business enterprise between two dates´. Funds flow statement is called by various names such as sources and application of funds. 4. Flow of funds is said to have taken place when any transaction makes changes in the amount of funds available before happening of the transaction. It is a statement showing sources and uses of funds for a period of time. funds received and . Funds issued by the issue of equity shares are the best from risk point of view for the company as there is no question of repayment of equity capital except when the company is under liquidation. where gone statement. Funds procured from different sources have different characteristics in terms of risk. From the cost point of view equity capital is most expensive source of funds as dividend expectations of shareholders are normally higher than prevalent interest rates. MEANING AND DEFINITION OF FUNDS FLOW STATEMENT Funds flow statement is a method by which we study changes in the financial position in the business enterprise between beginning and ending financial statement dates. statement of changes in financial position. If the effect of transaction results in the increase of funds it is called source of funds and if it results in the decrease of funds it is known as an applications of funds the term flow of funds refers to the movement of funds in the working capital it is said to be a source or inflow of funds and if it results in the decrease of working capital. Financial management constitutes risk. it is said to be an application or outflow of funds. where came in and where gone out statement. 3. movement of working capital statement movement of funds statement. The cost of funds should be at minimum for a proper balancing of risk and control MEANING AND CONCEPT OF µFLOW OF FUNDS¶ The term µflow means movement and includes both µinflow¶ and µoutflow¶.

Generally. It can not reveal continuous changes. 2. 3. Net profit can also be computed by comparing the balance sheet at beginning and the end of the period. LIMITATIONS OF FUNDS FLOW STATEMENT The funds flow statement has a number of uses. It should be remembered that a funds flow statement is not a substitute of an income statement or a balance sheet. how ever it has certain limitations also which are listed below: 1. It is essential historic in nature and projected funds flow statement cannot be prepared 5. funds generated and expended statement. arrangement of data given in the financial statements. funds statement etc. It provides only some additional information as regards changes in working capital.disbursed statement. This fact . We can easily realize the impact of profit & loss account if we remember that revenue is an inflow of assets (or outflow of liabilities) and expenses are an out flow of assets (or inflows of liabilities). RELATIONSHIP BETWEEN BALANCE SHEET AN AND PROFIT & LOSS ACCOUNT The balance sheet and the profit & loss account are not two separate and independent statement but they are related to each other. It is not an original statement but simply. 4. Changes in cash are more important and relevant for financial management than the working capital. The profit & loss account is a link between the balance sheet at the beginning of the period and the balance sheet at the end of the period. the profit and loss account is prepared to compute net profit.

It indicates the financial condition or the state of affairs of a business at a particular moment of time. The generally accepted convention is to show one year events in the profit and loss account. LIST OF NON CURRENT OR PERMANENT CAPITAL ACCOUNTS Non-current or permanent liabilities Equity share capital Preference share capital Redeemable preference share capital Debenture Long term loans Share premium account Share forfeited account Non-current or permanent assets Goodwill Land Building Plant & Machinery Furniture & fittings Trade Marks Patent rights . The balance sheet is a stock or status statement as it shows assets. as measured by its resources and obligations. The earning capacity and potential of a firm are reflected by its profit and loss account. the difference in beginning and ending owner¶s equity is the net profit (or net loss). Since the profit and loss account reflects the results of operations for a period of time. Net profit (or net loss) for a period is equal to the change in owner¶s equity during that period. More especially balance sheet contains information about resources and obligations of a business entity and about its owner¶s interests in the business at a particular point of time. In the language of accounting balance sheet communicates information about assets. PROFIT AND LOSS ACCOUNT Balance sheet is considered as a very significant statement by bankers and other lenders because it indicates the firm¶s financial solvency and liquidity. liabilities and owners equity for a business firm as on a specific date. It is a flow statement. as a starting point. the balance sheet reveals the firms financial position on specific date. The profit and loss account is a ³score board´ of the firms performance during a period of time. Thus. However. liabilities and owners equity at a point of time. BALANCE SHEET Balance sheet is the most significant financial statement. creditors. Thus. It provides a snapshot of the financial position of the firm at the firms accounting period. particularly bankers and financial analysis in India have recently started paying more attention to the firm¶s earning capacity as a measure of its financial strength.emphasizes the role of the profit and loss account as a link between consecutive statements of financial position.

g. f.Profit & loss account Capital reserve Capital redemption reserve Provision for depreciation against fixed assets Appropriate of profits a. e. d. advances and deposits Current assets Cash in hand Cash at bank Bills receivable Sundry debtors or accounts receivable Short-term loans and advances Temporary or marketable investments . b. h. General reserve Dividend equalization fund Insurance fund Compensation fund Sinking fund Investment fluctuation fund Provision for taxation Proposed dividend Long-term investment Debit balance of Profit & loss account Discount on issue of shares Discount on issue of debentures Preliminary Expenses Other differed expenses LIST OF CURRENT OR WORKING CAPITAL ACCOUNTS Current liabilities Bills payable Sundry creditors or accounts payable Accrued or outstand expenses Dividends payable Bank overdraft Short term loans. c.

An increase in current liabilities decreases working capital and. Statements of sources and application of funds. Broadly speaking the preparation of a funds flow statement consists of two parts: 1. c. . Proposed dividend(may be current/non-current liability) Prepaid expenses Accrued incomes PROCEDURE FOR PREPARING A FUNDS FLOW SATEMENT Funds flow statement is a method by which we study changes in the financial position of a business enterprise beginning and ending financial statements dates. b. An increase in current assets increases working capital. d. USES. 2. A decrease in current assets decreases working capital. 2. Working capital = Current assets ± Current liabilities 1. A decrease in current in current increases working capital.Provision against current assets Inventories or stocks such as a. Raw materials Work in process Stores and spares Finished goods Provision for taxation if it does not amount to appropriation of profits. hence the funds flow statement is prepared by comparing two balance sheets and with the help of such other information derived from the accounts as may be needed. 4. Statement or Schedule of changes in working capital funds. SIGNIFICANCE AND IMPORTANCE OF FUNDS FLOW STATEMENT y It helps in the analysis of financial operations. 3.

It helps in the formation of realistic dividend policy. It helps in a appraising the use of working capital. It acts as a future guide.y y y y y y It throws light on many perplexing questions of general interest. It helps in the proper allocation of resources. STATEMENT OF SCHEDULE OF CHANGES IN WORKING CAPITAL PARTICULARS PREVIOUS CURRENT EFFECT ON WORKING YEAR YEAR CAPITAL INCREASE DECREASE CURRENT ASSETS Cash in hand Cash at Bank Bills receivable Sundry Debtors Temporary investments Stocks/Inventories Prepaid expenses Accrued Incomes Total Current Assets CURRENT LIABILITIES Bills payable Sundry creditors Outstanding expenses Bank overdraft . It helps knowing the overall credit worthiness of a firm.

c) Redemption of debentures d) Purchase of Investment and other fixed assets.Short-term advance Dividend payable Proposed dividends* Provision for taxation* Total current liabilities Working Capital (CA-CL) Net increase or decrease in working capital * May or may not be a current liability PROFORMA OF A FUDS FLOW STATEMENT Statement of Sources and Application of Funds Sources: Rs A. Issue of Debenture C. Issue of share capital B. Total_______ Applications: a) Payment of share capital b) Repayment of institutional loans. . Sale of Investment and other fixed assets E. Trading profit or funds from operations. Institutional Loans D.

Data from 1995 indicated that India exported 37. Data on exports of Indian mango pulp and juice products are more limited.4 thousand metric tons. but also imported 2. these factors indicate a strong opportunity to position Indian mango and mango products to meet a growing international demand. India is a minor exporter of mango and mango products at this time. the consumption growth for mangos in the United States and Europe has average 10±15% per year during the last 5 years. Mango is in strong demand within the worldwide retail sector. This accounts for 41% of the estimated worldwide mango production of 25. Additionally. Data from 2001 indicated that India exported 3. Despite this large mango production. The total market value of Indian mango and mango pulp represents 25% of the value of agricultural and processed food products exported by India.4% of mango production during this time frame. or only about 0. Collectively. as well as globally. these observations indicate that.56 million metric tons in 2003.2 thousand metric tons of mango juice.7 thousand metric tons of mango pulp. Collectively. including leading varieties like Alphonso. During the five±year period from 1998±2002. Moreover. India is well positioned to capitalize on this opportunity with a very large national production of mangos. . India has the potential to create a long±term global market position and to capitalize on the fast growth of mango as a preferred ingredient for the natural package food industry. mango is a preferred fresh fruit within the Indian domestic market.2 thousand metric tons of mango juice. exports of fresh mangos from India averaged approximately 42.e) Non-trading payments Total_______ INDUSTRIAL PROFILE BACKGROUND OF MANGO INDUSTRY The lack of mango market development globally opens a large untapped opportunity for India to make an organized entry in the fresh mango and mango pulp market.

PFID²F&V is working to strengthen the small and medium mango grower base by providing capacity building at all levels. these steps will help stabilize prices. Within the value chain. testing facilities. increase farmer incomes. This report concludes that it is imperative to streamline the mango supply chain in order to reduce wastage and raw material costs. a number of buyers and other aggregators operate at local Minds and APMC to assemble larger lots from the many small producers in any given region. will lead to better yields. A further approach will target reduction of waste in the fresh mango chain by developing high±value mango products and enhancing processing capacity for the domestic market. Ultimately. as well as employment of certification systems. and a more efficient supply chain. and development the farmer base at commercial and social levels. and Indian government organizations. improved packing and grading facilities. One barrier to efficient development of the Indian mango industry is an exceedingly complex supply chain. India exports less than 1% of its mango crop as fresh mangos or processed mango products. INDIA MANGO & MANGO PULP INDUSTRY DEVELOPMENT Through partnerships with mango growers. PFID²F&V partnerships will also help identify and facilitate resources necessary for enhancing the mango supplychain such as cold storage facilities. Numerous stakeholders in India have expressed concern that this overly complex value chain is a hindrance to effective marketing of Indian mangos and mango products. Education and training in Good Agricultural Practices and other sanitary standards. processors. among others. These observations with mango are consistent with aggregate data available on Indian fruit and vegetable exports. Furthermore. Associated with this inefficient aggregation process is the application of numerous commissions as fresh agricultural products trade hands. A recent report from the Indian Ministry of Food Processing Industries further details the overly complex supply chain and its contribution to costs and post±harvest losses. (Sources: India Ministry of Food Processing Industries and Rambo bank Report).despite being by far the world¶s largest mango producer. export organizations. and logistics management. pesticide use in accordance with regulations. .

only 1% of the total mango production in India is exported. o PFID²F&V will partner with relevant Indian organizations in establishing a global image for the Indian mango starting with the establishment of quality standards and Good Agricultural Practices (GAPs) standards for India. just over one year from project start-up. Dr. Thiagarajan. now. together with our two India-based coordinators. PFID²F&V will facilitate the development and implementation of quality and safety standards which will meet the demands of the export market. o PFID partnerships in India can facilitate the development of a distribution network in European and other countries where the value realizations for mango and mango pulp are the highest. even if there is a rise in prices in global market MANGO MARKET DEVELOPMENT PFID-F&V India has continued to forge and strengthen public and private partnerships to the point that. MSU/PFID-F&V. One reason contributing to this poor export performance is that overseas buyers have stricter standards than are currently accepted within the Indian domestic market. recently met with the Agricultural Product Export Development Authority (APEDA) as well as the Federation of Indian Chambers of Commerce (FICCI) and the National Institute of Marketing Boards (NIAM) to follow up on each of their commitments to promote the Indian Mango Industry. o PFID partnerships can assist mango growers and processors in developing an "India" brand image for fresh mango and processed mango products that meet . notable results are beginning to show in the form on increasing contributions from partnership members. GOALS OF INDIA MANGO MARKET DEVELOPMENT Currently.000 hectares in Krishna Giri district Mango pulp processed annually is 50. as there is no testing facility in Krishnagiri Farmers are not getting fair price.MANGO PULP INDUSTRY HOPES o o o o o Mango pulp production to reach 75.000 tones by 2010 Mango is raised in 36.000 tones Farmers have to go to Bangalore.

such as Sesame Seeds. plantation. FOOD PROCESSING Food processing involves any type of value addition to agricultural or horticultural produce and also includes processes such as grading. USA. Western Europe. export and growth prospects. for minimizing pre/post harvest wastage. COMPANY PROFILE HISTORY OF FOOD AND INNS Ltd. consumption. FOODS AND INNS Ltd began its fruit processing operations in early 70s. Far East. The division was set up in 1967 and since then has handled a wide range of products . high protein foods etc. The Food Processing Industry sector in India is one of the largest in terms of production. FOODS AND INNS Ltd has established it's presence as a reliable and competitive exporter to Coca Cola. meat and poultry. o After demonstrated success in developing a strengthening the market development of mangoes. Processed Fruits etc. mineral water. alcoholic beverages. India's food processing sector covers a wide range of products fruit and vegetables. milk and milk products. to encourage commercialization and value addition to agricultural produce. Soya-based products. and packaging which enhance shelf life of food products. The division combines people with vast experience in agric-trading with the FOODS AND INNS Ltd Group¶s credibility to justify its premier standing in the trading arena. The food processing industry provides vital linkages and synergies between industry and agriculture.consumer preferences. fisheries. sorting. generating employment and export growth. The predominant mango varieties grown in India make this product unique in country and abroad. BACKGROUND OF FOOD AND INNS Ltd . grain processing and other consumer product groups like confectionery. Middle East etc. . PFID India liaisons can easily adapt this approach to the further development of other fruit and vegetable products in India. The government has accorded it a high priority.However fruit processing operations have been given a special thrust since the last season with an emphasis on developing strategic partnerships across the value chain especially fruit procurement and processing. chocolates and cocoa products. with a number of fiscal relief¶s and incentives.

Guava & Papaya Institutional packs of mango products. . PRINCIPAL MANUFACTURING DIVISIONS AND PRODUCT RANGE DIVISION PRODUCT RANGE Aseptic Canning Purees and concentrates of Mango. FOODS AND INNS LTD is encouraging farmers to mobilize the fruits directly to the factory. Guava & Papaya Paste. FOOD AND INNS Ltd (FIL) is a 100% Export Oriented Unit (EOU) processing Tropical Fruit Purees.Situated at Chittoor in Andhra Pradesh. the industry and the nation in a phased manner. Concentrates and Fresh Fruits FOOD AND INNS Ltd was started keeping in mind the local farming community wealth. FOODS AND INNS Ltd believes in empowering farmers by providing technical assistance from research institutes in the food industry to support the farmers in achieving better quality and higher yields by developing the gardening and harvesting techniques. The farming community is an integral part and forms the backbone of the organization. Frozen Frozen fruit purees & IQF chunks. In its effort to be a forerunner in the chosen areas of business in terms of best practices in quality and technology. thereby minimizing the fruit handling damages and high value realizations. Further to educating farmers with latest horticultural techniques. the mango belt in India. frozen IQF vegetables & frozen Indian snacks like Samosa and Ptras. FIL plans to benefit armors. Consumer packs of Indian vegetables & catering packs for mango Chutneys.

the doyen guidance of Mr. Banana. D. B. a Chartered Accountant from U. PRODUCTS . IIM Professor Director Mr. D. Engineer Mr. With the back up of technical and managerial support staff. Trivedi Mr.K.160 Crores (USD 16 MIO) giving the status of government recognized EXPORT HOUSE.Raymond Simkins Mr.5 crores (USD1. the company is poised for a steady and continuous growth graph moving upwards in all Para meters.Maniar Mr.Utsav coupled with the contribution of other directors.No Name of the Director 1 2 3 4 5 6 Mr. innovative R & D and Lab facilities. Dalal Director Solicitor Foreign Director Solicitor Ex..M.Spray Drying Fruit powder like Mango.B. is the brain and brawl for taking the company¶s turnover from Rs. Orange.C. looking after the routine affairs of the company. M.D.. the state of art technology implementation. BOARD OF DIRECTORS S. Tomato and beat root.1 MIO) to Rs. Utsav Dhupelia .Utsav Dhupelia Mr.


This place has been earmarked to host Integrated Food Complex of International standards. Italy to produce natural fruit pulps & concentrates.Market Presence o o o o o o European Union United States of America Canada Australia Middle East including Iran & North Africa Japan & South Korea SAHER OF COUNTRIES MARKET FACILITY FOODS AND INNS Ltd processing facility is located in Chittoor. spread over an area of 15 acres. CUTTING EDGE TECHNOLOGY FOODS AND INNS Ltd plant is equipped with state-of-the-art fruit puree processing aseptic filling line of SIG. The facility currently has a tropical fruit Puree / Concentrate processing plant and the pack house for preparing the Fresh Fruits & Vegetables. INITIATIVES SPAN THE FOLLOWING DISCIPLINES .Mizzen. The plant has one of the India's single largest fruit processing lines -10 TPH ripen fruit processing with Aseptic Packaging.

o PLC operated equipments for better control over monitoring and operations with supervisory units. VALUABLE INDUSTRIAL EXPERTISE FOOD AND INNS Ltd is backed with strong support and service from its team of highly qualified technical personnel and domain experts with perceptive knowledge and skill. allowing a closer control on quality and operations. o Two stage washing of fruits to ensure HACCP quality requirement. PURE & CONCENTRATE FACILITY . o Advanced high raise insulated roofing with double layer GI Sheeting with air extractors to maintain temperature inside the plant. o Two-stage sterilization to retain the natural flavor and aroma. o High speed advanced Mono block aseptic filling machine supplied by SIG Mizzen. o Straight-line process flow design to maintain the hygiene‡ and control in respective areas. o Special food grade self-leveling epoxy flooring to maintain optimum hygienic conditions. EFFICIENT PLANT LAYOUT o Minimal drop in power and steam transfer. o Curved corners and food grade epoxy painted walls to avoid dust accumulation and to facilitate easy washing. o Integrated Enterprise Resources Planning system is in place to automate business processes and provide data for analysis and reporting. Powered by priceless hands-on experience these professionals are upgrading themselves continuously to identify and introduce improved and innovative product offerings that would delight customers worldwide and comply with the leading global quality standards. o Utility lines are routed outside the plant to keep the interiors free from dust accumulation.

pre cooling chambers and cold storage to handle fresh fruits and vegetables. it needs a integrated& scientific approach for its management to use it so that undesirable wastage is avoided which helps us to save water for right utilization . PACK HOUSE FOODS AND INNS (P) Ltd has a set up a Fresh fruit and Vegetable processing facility from Grief. The facility also holds ripening chambers. The line has a capacity to process 10 metric tones per hour ripened fruits. Without water there is no life on the earth. Egg plant. VAPOUR HEAT TREATMENT To enable Fresh Mango exports to countries like Japan and Korea. FOOD AND INNS Ltd has commissioned the VHT facility. we are taking following steps at various locations of its use: . From there it is pumped to over head tank to supply to various locations of use. Bitter gourd etc. The water is potable. bananas are processed along with tropical vegetables like Okra. STAGE OF USE OF WATER TO THE BEST EFFECT IN OUR FACTORY Our main source of water is bore wells. The processing line is fully integrated and controlled by PLC. Fresh fruits including mangoes. This ensures irradiation of the fruit flies in the fresh fruit. It is as important to the fruit processing industry as to the living being. Lemon. WATER MANAGEMENT Water is an essential & precious natural resource. It is a nature¶s gift. Water from all bore wells is collected in a sump. To manage appropriately & conserve the water. FOOD AND INNS Ltd is the first private organization to set up this facility in the country.The fruit processing aseptic line is from SIG-Mazzini of Italy. water is becoming scarce year by year due to increase n its consumption in industries & agriculture sectors & indiscriminate use /wastage by human beings. therefore. But. Spain.

GERMANY o ISO 9001:2000 (QUALITY MANAGEMENT SYSTEM) BY TUV. GERMANY o KOSHER BY STAR-K. Off-shore logistical service providers has made the supply chain process extremely competitive. This water is chl0rinated to control the contamination by continuous dosing of chlorine in the washing tub. Given our renewed emphasis on this product line we are strengthening relationships in key markets across the buyer spectrum. FOODS AND INNS Ltd expertise in the business and its contacts with Agents\Brokers. understanding unique requirements and delivering value to select global customers. o STEAM GENERATION Water for boiler feeding is treated in water softener to reduce the hardness. The steam condensate of evaporator is recycled to boiler to save water & energy as condensate will have high temperature. OUR CERTIFICATIONS INCLUDE o HACCP (FOOD SAFETY CERTIFICATION) BY TUV.o FRUIT WASHING The water is re-circulated after filtration up to it becomes dirty. FUTURE PLANS y y y y Development of the Indian market for foods and inns. Expansion in 4th Aseptic manufacturing capacity. End User. Blender-bottlers. Use of IT as a tool to further Business goals. Thrust of exports. USA o SURE GLOBAL FAIR (SGF) o HALAL CERTIFICATION CUSTOMER FOCUS Loyalty and a strong relationship in business are built out of years of experience in a particular industry. .

journals & websites etc. 2. From financial department of the company retaining to the last 4 years. Financial statement of the company. newspaper. METHODOLGY The data is of two type: y Primary data y Secondary data PRIMARY DATA: Personal interview and discussion was conducted for the collection of data.. 4. 3. We collect through books magazines. . Annual reports of the company during 2004-2008. In this study. Company records related to financial management.y Setting up of a Central R&D lab. Backward integration for improved quality of raw materials using contract farming/ organic cultivation. SECONDRY DATA: Secondary Data are already present one and it is second hand information. the secondary data was collected from the company like 1.

From various financial management next books. 3.5. To know various needs for which funds were obtained during a particular period based in which these funds where employed. OBJECTIVES 1. . To analyze the changes of financial position of Foods and Inns Limited enterprises between two dates. To analyze the changes in assets and liabilities from the end of one period of the time to the end of another period of time 2. To find out the sources from which additional funds were derived and the use to which their sources were put. 4. To understand flow of funds in current or non-current accounts. 5.

Now a days it is being widely used by the financial analyst credit granting institutions and financial managers. It is a technical device designed to analyze the changes in the financial condition of the business enterprises between two dates. This funds flow statement is a statement which indicates various means by which the funds have been obtained during a certain period and the ways to which these funds have been used during the period. The term funds used here means working capital that is the excess of current assets over current liabilities. The basic purpose of the funds flow statement is to reveal the changes in the .SCOPE OF THE STUDY The present study focuses as sources of funds and application of funds for a period of time. It is an essential tool for the financial analysts and is of primary importance to the financial management. The study is confirmed to find out the changes in the financial position of the Foods and Inns Limited between the beginning and ending financial date.

It helps in the analysis of financial operations. The study based on the available annual reports and internal information only . It helps in appraising the use of working capital and finally it acts as future guide. It should remember that a funds flow statement is not a substitute of an income statement or a balance sheet. 2. It provides only some additional information as regards changes in working capital 3. 4. It cannot reveal continuous changes. It helps in the formation of realistic dividend policy. It helps in the proper allocation of resources. LIMITATIONS 1.working capital on the two balance sheet dates.

43.A Current Liabilities(C.53.L): Current Liabilities Provisions 7.665 9.06.558 8.48.485 74.714 25.C) (C.A): Inventories S.STATEMENT OF CHANGES IN WORKING CAPITAL Particulars 2004 2005 Effect on Working Capital Increase Decrease Current Assets(C.622 9.53.865 2.L) 56.354 5.58.288 Increase in W.87.73.707 36.L Net Working Capital(W. 25.507 7.293 62.39.658 1.200 Cash & bank b/s Loans & Advances Investment Total C.58.714 9.561 4.AC.507 25.773 3.80.C TOTAL 7.793 12.058 . Total C.851 10.67.02.

675 Purchase of Fixed Asset 27. The financial position of FOODS AND INNS LTD in this particular year is good STATEMENT OF CHANGES IN WORKING CAPITAL TABLE the main sources of funds are secured and unsecured loans. The firm utilizing this fund for the purchasing of fixed assets.41.25.593 Interpretation: Comparing the year 2004 and 2005 the statement of changes in working capital shows the increasing balance.07.56.593 13.39.1 FUNDS FLOW STATEMENT FOR THE YEAR 2005 TABLE NO: 4.963 10.060 53.3 Particulars 2005 2006 Effect on Working .54. differed tax asset and liabilities.41. As a result the funds flow statements. 75.086 7.341 Increase in Working Capital 4.19. In the particular year the current assets are increased then the current liabilities.507 13.586 ---- Amount 5.2 Sources Reserves & Surplus Deferred Tax Liability Secured &Unsecured Loans Miscellaneous Deferred Tax Assets Capital W-I-P Decrease in Working Capital Amount Applications 2.TABLE NO: 4.

418 7.58.L) Increase in W.29.310 87.38.C) (C.938 28.534 2.918 2.82.772 15.915 1.11.865 61.017 49.820 36.82.601 . Current Liabilities Provisions Total C.A Current Liabilities(C.16.558 25.27.140 12.31.534 Decrease Investment 2.248 2.L Net Working Capital(W.30.31.166 Total C.28.53.773 Increase Current Assets(C.33.851 9.02.293 12.48.A-C.A): Inventories S.95.685 4.70.716 84.055 42.354 12.248 616.70.84.43.debtors Cash & bank b/s Loans & Advances 12.39.943 1.

11.856 Interpretation: .88.4 Sources Reserves & Surplus Deferred Tax Liability Secured &Unsecured Loans Miscellaneous Decrease in Working Capital Amount 1.748 2.000 ---- Applications Amount Purchase of Fixed Asset 94.534 3.100 Capital W-I-P 11.FUNDS FLOW STATEMENT FOR THE YEAR 2006 TABLE NO : 4.70.355 Increase in Working Capital 1.

918 13.805 8.97.84.AC.97.485 6.40. STATEMENT OF THE CHANGES IN WORKING CAPITAL TABLE NO: 4.526 3.733 6.485 31. differed tax liabilities. The firm utilizing this fund for the purchasing of fixed assets and capital WIP and the financial position of FOODS AND INNS LTD in this particular year is good.024 Cash & bank b/s Loans & Advances Investment Total C.793 28.222 2.772 As a result the funds flow statements. 16.78.733 Net Working Capital(W.000 14.38.716 8.14. In the particular year the current assets are increased then the current liabilities.49.733 2.12.C) (C. 18.055 2.A Current Liabilities(C.C 12.L): Current Liabilities Provisions Total C.43.06.166 44. the main soureces of funds are secured and unsecured loans.571 9.011 FUNDS FLOW STATEMENT FOR THE YEAR 2007 .74.310 10.L) Increase in W.94.47.671 1.248 31.180 1.82.608 2.088 1.5 Particulars 2006 2007 Effect on Working Capital Increase Decrease Current Assets(C.Comparing the year 2005 and 2006 the statement of changes in working capital shows the increasing balance.A): Inventories S.72.011 2.06.758

69.838 8.06.939 14.04.87. differed tax liabilities.08. the main sources of funds are secured and unsecured loans.13.02.778 ------- Applications Amount Purchase of Fixed Asset 5. As a result the funds flow statements. Cash & bank b/s Loans & Advances Investment 16.6 Sources Reserves & Surplus Deferred Tax Liability Secured &Unsecured Loans Miscellaneous Decrease in Working Capital Amount 2.884 Interpretation: Comparing the year 2006 and 2007 the statement of changes in working capital shows the increasing balance.98.71.661 2.28.130 96.132 In the particular year the current assets are increased then the current liabilities.47.311 50.77.84.TABLE NO: 4.616 Capital W-I-P 74.726 4.000 3.485 8.024 19. The firm utilizing this fund for the purchasing of fixed assets and capital WIP and the financial position of FOODS AND INNS LTD in this particular year is good Particulars 2007 2008 Effect on Working Capital Increase Decrease Current Assets(C.180 14.37.A): Inventories S. .75.12.783 Increase in Working Capital 2.884 8.84.213 2.29.911 7.11.156 5.685 2.

526 49.7 FUNDS FLOW STATEMENT FOR THE YEAR 2008 TABLE NO: 4.214 Total C.27.86.704 2.C) (C.82.L) 31.74.C 1.85.061 9.Total C.14.A Current Liabilities(C.734 Applications Purchase of Fixed Asset Amount 3.538 decrease in W.74.733 Sources Amount Reserves & Surplus 31.14.482 13.229 Decrease in Working Capital 1.92.AC.98.732 11.196 .91.222 19.752 Increase in Working Capital -------- 1.00.433 Deferred Tax Liability 6.L): Current Liabilities Provisions 19.733 29.732 STATEMENT OF CHANGES IN WORKING CAPITAL TABLE NO: 4.L Net Working Capital(W.733 11.085 Secured &Unsecured Loans

The working capital is increased year by year except last year. It is founded that the company is holding share capital stably. As a result the funds flow statements. The company receives the secured and unsecured loans indicate fluctuating position. 4. 2. In the particular year the current assets are decreased then the current liabilities. differed tax liabilities.Interpretation: Comparing the year 2007 and 2008 the statement of changes in working capital shows the decreasing balance. 3. Apart to this the surplus funds also increased. 5. The company was highly purchased the fixed assets in the year 2005&2007. The differ tax liability is increased in 2005-2006.Then it fall down.Then in 2006&2008 the company used low funds for purchasing of fixed assets. the main sources of funds are secured and unsecured loans. . The financial position of FOODS AND INNS LTD in this particular year is good FINDINGS 1. The firm utilizing this fund for the purchasing of fixed assets.

y In 2008. 8. . y Tax liabilities should also be maintained in a standard manner. The working -in. the statement shows decreasing working capital in the company.progress rapidly increased by large variation with the amount. In 2008 it is decreased. The working capital is increased in 2005 to 2007 with a low variation in the year the working capital will be decreased. 7. It is to require raising short terms funds to solve the financial problems. y Regularly use funds in purchase of fixed asset it make profitability. The investment is increased year by year up to 2007.6. SUGGESTIONS y The company may increase their share capital it helps to get more strength in financial position.

secured& unsecured loans.P.I. The main applications of funds are purchase of fixed assets & capital W.CONCLUSION It can be concluded that in FOODS & INNS PRIVATE LTD The working capital in increased year by year except last year. .The over all performance of FOODS &INNS PVT LTD is very good. And its main sources of funds are deferred tax liability. 30.98.640 79.41.351 53.78.812 5.08.528 1.161 51.384 1.868 (+)Operating income Operating profit (-)Non-operating expenses (+)Non-operating income Profit / loss before tax (-)Provision for tax Profit / loss after tax ( 93.313 44.097 46.20.033 54.574 .922 1.562 (1.98.581 1.160 35.37.870 2.21.Income statement of Foods and Inns Limited for the years 31-3-2004 and 31-3-2008 (Rupees) Particulars Net sales (-)Cost of goods sold Gross profit (-)Operating expenses 31-3-2004 31-3-2005 31-3-2006 31-3-2007 31-3-2008 61.258 97.297 1.045 55.326 3.511 1.142 4.34.925 1.471 ( 48.39.204 16.043 ( 52.90.825 4.798 2.160 5.62.969 5.385 2.595 3.636 45.25.076 4.616 48.709) 3.894 7.709

180 14.13.499 . 12.93.968 14.060 assets Capital work in progress TOTAL FA 16.80.042 20.330 95.915 1.78.Miscellanious expenditure TOTAL ASSETS(1+2+3+4+5) LIABILITIES: 6.700 2.for the year 31-3-2004 and 31-3-2008 (Rupees) Particulars 31-3-2004 31-3-2005 31-3-2006 31-3-2007 31-3-2008 ASSETS: 1.Currentassets loans&advances Inventories 7.354 12.53.000 62. provisions: 24.42.571 41.793 2.88.185 34.773 Sheet of Foods and Inns ltd.85.841 32.293 1.515 40.Invesments 69.175 61.450 33.156 Sundry debtors 35.288 75.08.911 7.939 Loans & advances 12.361 19.74.311 TOTAL CA 2.24.804 26.26.044 tax assets 5.Current liabilities. 21.977 94.658 16.72.405 2.12.950 2.71.261 27.661 Cash&bank balances 74.28. holders funds: Share capital Reserves & surplus TOTAL 6.46.200 24.515 1.95.616 3.910 liabilities Provisions TOTAL CL 7.82.510 Financial Management I.06.629 29.M.05. 1.793 21.55.918 13.65.304 27.704 62.153 1.Loan funds: Secured loans Unsecured loans TOTAL 8.76.381 4.608 2.499 BIBLIOGRAPHY The following books and websites have been referred by me during my project work.960 19.75.028 44.293 12.58.348 69.235 1.104 9.431 2.896 48.PANDY . 15.798 34.772 23.231 25.67.214 1.55.160 1.257 30.145 18.558 1.701 10.65.200 14.500 13.78.310 10.963 62.36.688 3.64.49.Deffered tax liabilities TOTAL LIABILITIES(6+7+8+9)

Management Accounting M.Y.GOOGLE. Financial Management KHAN AND JAIN 3.2.COM .KHAN WEB SITES WWW.FOODSANDINNS.COM WWW.

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