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.

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. it is said to be an application or outflow of funds. 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¶. 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. movement of working capital statement movement of funds statement. 2. 5. 4. summary of financial operations. funds received and . As funds can be obtained from different sources so procurement of funds is considered as an important problem of business concerns. 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. statement of changes in financial position. cost and control. 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´. "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". 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. sources and uses of funds. The term flow of funds means transfer of economic and values from one asset of equity to another. Funds flow statement is called by various names such as sources and application of funds. where got.According to Phillippatus. Financial management constitutes risk. PROCUREMENT OF FUNDS 1. Funds procured from different sources have different characteristics in terms of risk. cost and control. 3. where came in and where gone out statement. 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. where gone statement. It is a statement showing sources and uses of funds for a period of time.

disbursed statement. 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. the profit and loss account is prepared to compute net profit. LIMITATIONS OF FUNDS FLOW STATEMENT The funds flow statement has a number of uses. It is not an original statement but simply. 3. funds generated and expended statement. It is essential historic in nature and projected funds flow statement cannot be prepared 5. Generally. It can not reveal continuous changes. 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. 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. arrangement of data given in the financial statements. Changes in cash are more important and relevant for financial management than the working capital. It provides only some additional information as regards changes in working capital. 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). 4. Net profit can also be computed by comparing the balance sheet at beginning and the end of the period. 2. funds statement etc. This fact .

It is a flow statement. 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. Thus. the difference in beginning and ending owner¶s equity is the net profit (or net loss). 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. It indicates the financial condition or the state of affairs of a business at a particular moment of time. the balance sheet reveals the firms financial position on specific date.emphasizes the role of the profit and loss account as a link between consecutive statements of financial position. It provides a snapshot of the financial position of the firm at the firms accounting period. creditors. as measured by its resources and obligations. Since the profit and loss account reflects the results of operations for a period of time. The earning capacity and potential of a firm are reflected by its profit and loss account. Net profit (or net loss) for a period is equal to the change in owner¶s equity during that period. In the language of accounting balance sheet communicates information about assets. The profit and loss account is a ³score board´ of the firms performance during a period of time. Thus. 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. However. liabilities and owners equity at a point of time. as a starting point. BALANCE SHEET Balance sheet is the most significant financial statement. The generally accepted convention is to show one year events in the profit and loss account. 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. liabilities and owners equity for a business firm as on a specific date.

Profit & loss account Capital reserve Capital redemption reserve Provision for depreciation against fixed assets Appropriate of profits a. f. b. d. e. 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 . 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. h. g. c.

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. USES. Statement or Schedule of changes in working capital funds. 2. b. Raw materials Work in process Stores and spares Finished goods Provision for taxation if it does not amount to appropriation of profits. 3.Provision against current assets Inventories or stocks such as a. 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. SIGNIFICANCE AND IMPORTANCE OF FUNDS FLOW STATEMENT y It helps in the analysis of financial operations. A decrease in current in current increases working capital. A decrease in current assets decreases working capital. 4. c. An increase in current liabilities decreases working capital and. Broadly speaking the preparation of a funds flow statement consists of two parts: 1. An increase in current assets increases working capital. Statements of sources and application of funds. d. Working capital = Current assets ± Current liabilities 1. . 2.

It helps in a appraising the use of working capital. It helps in the formation of realistic dividend policy. It acts as a future guide. 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 .y y y y y y It throws light on many perplexing questions of general interest. It helps knowing the overall credit worthiness of a firm. It helps in the proper allocation of resources.

Institutional Loans D. c) Redemption of debentures d) Purchase of Investment and other fixed assets. Total_______ Applications: a) Payment of share capital b) Repayment of institutional loans. Sale of Investment and other fixed assets E.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 share capital B. Issue of Debenture C. Trading profit or funds from operations. .

mango is a preferred fresh fruit within the Indian domestic market. the consumption growth for mangos in the United States and Europe has average 10±15% per year during the last 5 years. Despite this large mango production.7 thousand metric tons of mango pulp. 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. Moreover. or only about 0. including leading varieties like Alphonso. This accounts for 41% of the estimated worldwide mango production of 25.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.56 million metric tons in 2003. Data from 2001 indicated that India exported 3. The total market value of Indian mango and mango pulp represents 25% of the value of agricultural and processed food products exported by India. Additionally. Data from 1995 indicated that India exported 37. Collectively. these observations indicate that. .2 thousand metric tons of mango juice. During the five±year period from 1998±2002. these factors indicate a strong opportunity to position Indian mango and mango products to meet a growing international demand. Collectively. as well as globally.4 thousand metric tons. Data on exports of Indian mango pulp and juice products are more limited. exports of fresh mangos from India averaged approximately 42. but also imported 2. India is a minor exporter of mango and mango products at this time. India is well positioned to capitalize on this opportunity with a very large national production of mangos.2 thousand metric tons of mango juice.4% of mango production during this time frame. Mango is in strong demand within the worldwide retail sector.

One barrier to efficient development of the Indian mango industry is an exceedingly complex supply chain. among others. 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. INDIA MANGO & MANGO PULP INDUSTRY DEVELOPMENT Through partnerships with mango growers. Ultimately. Furthermore. (Sources: India Ministry of Food Processing Industries and Rambo bank Report). This report concludes that it is imperative to streamline the mango supply chain in order to reduce wastage and raw material costs. pesticide use in accordance with regulations. India exports less than 1% of its mango crop as fresh mangos or processed mango products. 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. Associated with this inefficient aggregation process is the application of numerous commissions as fresh agricultural products trade hands. and development the farmer base at commercial and social levels. PFID²F&V partnerships will also help identify and facilitate resources necessary for enhancing the mango supplychain such as cold storage facilities. improved packing and grading facilities.despite being by far the world¶s largest mango producer. PFID²F&V is working to strengthen the small and medium mango grower base by providing capacity building at all levels. These observations with mango are consistent with aggregate data available on Indian fruit and vegetable exports. . testing facilities. as well as employment of certification systems. and a more efficient supply chain. increase farmer incomes. 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. 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. these steps will help stabilize prices. processors. Within the value chain. and logistics management. will lead to better yields. Education and training in Good Agricultural Practices and other sanitary standards. export organizations. and Indian government organizations.

Thiagarajan. 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. o PFID partnerships can assist mango growers and processors in developing an "India" brand image for fresh mango and processed mango products that meet .MANGO PULP INDUSTRY HOPES o o o o o Mango pulp production to reach 75. GOALS OF INDIA MANGO MARKET DEVELOPMENT Currently.000 tones Farmers have to go to Bangalore.000 tones by 2010 Mango is raised in 36.000 hectares in Krishna Giri district Mango pulp processed annually is 50. notable results are beginning to show in the form on increasing contributions from partnership members. Dr. only 1% of the total mango production in India is exported. MSU/PFID-F&V. 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. together with our two India-based coordinators. 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. 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. now. One reason contributing to this poor export performance is that overseas buyers have stricter standards than are currently accepted within the Indian domestic market. as there is no testing facility in Krishnagiri Farmers are not getting fair price. just over one year from project start-up.

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

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

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


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. The plant has one of the India's single largest fruit processing lines -10 TPH ripen fruit processing with Aseptic Packaging. 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. spread over an area of 15 acres. Italy to produce natural fruit pulps & concentrates. INITIATIVES SPAN THE FOLLOWING DISCIPLINES . This place has been earmarked to host Integrated Food Complex of International standards.Mizzen.

o Utility lines are routed outside the plant to keep the interiors free from dust accumulation. allowing a closer control on quality and operations. o High speed advanced Mono block aseptic filling machine supplied by SIG Mizzen. o Two-stage sterilization to retain the natural flavor and aroma. o Two stage washing of fruits to ensure HACCP quality requirement. o Advanced high raise insulated roofing with double layer GI Sheeting with air extractors to maintain temperature inside the plant. PURE & CONCENTRATE FACILITY .o PLC operated equipments for better control over monitoring and operations with supervisory units. o Integrated Enterprise Resources Planning system is in place to automate business processes and provide data for analysis and reporting. o Straight-line process flow design to maintain the hygiene‡ and control in respective areas. 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 Curved corners and food grade epoxy painted walls to avoid dust accumulation and to facilitate easy washing. o Special food grade self-leveling epoxy flooring to maintain optimum hygienic conditions. EFFICIENT PLANT LAYOUT o Minimal drop in power and steam transfer. 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.

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

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

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

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

It is a technical device designed to analyze the changes in the financial condition of the business enterprises between two dates.SCOPE OF THE STUDY The present study focuses as sources of funds and application of funds for a period of time. 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 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. 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 . Now a days it is being widely used by the financial analyst credit granting institutions and financial managers. It is an essential tool for the financial analysts and is of primary importance to the financial management.

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

293 1.865 2.31.990 Total C. 10.91.507 25.48.STATEMENT OF CHANGES IN WORKING CAPITAL Particulars 2004 2005 Effect on Working Capital Increase Decrease Current Assets(C.64.665 2.915 56.81.058 . 3.67.13.L): Current Liabilities Provisions 7.561 4.707 36.60.714 12.858 9.16.debtors Cash & bank b/s Loans & Advances Investment Total C.97.558 8.293 62.58.85.L Net Working Capital(W.714 7.48.668 12.A): Inventories S.354 5.500 87.207 25.85.06.C TOTAL 7.C) (C.37.200 25.19.658 34.714 Increase in W. Current Liabilities(C.L) 17.858 7.98.

39.81.41.TABLE NO: 75.675 Purchase of Fixed Asset 27.341 Increase in Working Capital 4.963 10.586 ---- Amount 5. The financial position of FOODS AND INNS LTD in this particular year is good STATEMENT OF CHANGES IN WORKING CAPITAL TABLE 4.086 7.12. differed tax asset and liabilities.2 Sources Reserves & Surplus Deferred Tax Liability Secured &Unsecured Loans Miscellaneous Deferred Tax Assets Capital W-I-P Decrease in Working Capital Amount Applications 2.73.593 Interpretation: Comparing the year 2004 and 2005 the statement of changes in working capital shows the increasing balance. As a result the funds flow statements.07.3 Particulars 2005 2006 Effect on Working .507 13.593 13. The firm utilizing this fund for the purchasing of fixed assets. the main sources of funds are secured and unsecured loans. In the particular year the current assets are increased then the current liabilities.060 53.1 FUNDS FLOW STATEMENT FOR THE YEAR 2005 TABLE NO: 4.25.

65.166 Total C.49.293 8.Capital Increase Current Assets(C.865 Net Working Capital(W.248 2.11.A Current Liabilities(C.918 2.418 7.017 61.354 15.534 2.66.716 84.938 4.851 13.76.534 28.A): Inventories S. .82.43.248 28.050 Current Liabilities Provisions Total C.28.82.714 28.658 16.C) (C.943 1.82.53.C 9.248 616.95.558 1.30.055 Decrease Investment 36.915 1.565 42.L) Increase in W. Cash & bank b/s Loans & Advances 12.33.608 10.43.140 12.43.685

00.82.748 2.989 3.989 Interpretation: .856 1.72.355 Increase in Working Capital 2.4 Sources Reserves & Surplus Deferred Tax Liability Secured &Unsecured Loans Miscellaneous Decrease in Working Capital Amount FLOW STATEMENT FOR THE YEAR 2006 TABLE NO : 3.385 1.100 Capital W-I-P ---- Applications Amount Purchase of Fixed Asset 94.

94.A Current Liabilities(C.L) Increase in W.571 13.733 2.918 13.31.685 As a result the funds flow statements.222 2.04.310 10.716 8.12.32. the main soureces of funds are secured and unsecured loans.90.024 3.06.485 18.AC.088 1.28.733 31.C) (C.38.82. 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. 2.000 1.793 1. differed tax liabilities.77.L Net Working Capital(W.86.166 44.47.772 16.938 14.00.debtors Cash & bank b/s Loans & Advances Investment Total C.55.011 FUNDS FLOW STATEMENT FOR THE YEAR 2007 .526 8.055 2.685 3.12.Comparing the year 2005 and 2006 the statement of changes in working capital shows the increasing balance.89.248 31.97.5 Particulars 2006 2007 Effect on Working Capital Increase Decrease Current Assets(C. 2.758 12.75.A): Inventories S.39.38.14.L): Current Liabilities Provisions Total C. 12. In the particular year the current assets are increased then the current liabilities. STATEMENT OF THE CHANGES IN WORKING CAPITAL TABLE NO: 4.180 1.97.

778 ------- Applications Amount Purchase of Fixed Asset 77.TABLE NO: 4. In the particular year the current assets are increased then the current liabilities.47.debtors Cash & bank b/s Loans & Advances Investment Increase in Working Capital .884 8.250 Capital W-I-P 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.A): Inventories S.37.661 50.77.6 Sources Reserves & Surplus Deferred Tax Liability Secured &Unsecured Loans Miscellaneous Decrease in Working Capital Amount 2. As a result the funds flow statements.89.838 7.156 3.000 3.726 4.06.939 14.024 19. the main sources of funds are secured and unsecured loans.884 Interpretation: Comparing the year 2006 and 2007 the statement of changes in working capital shows the increasing balance.130 96.180 14. differed tax liabilities.685 2.75.268 8.

00.80.538 decrease in W.14.196 31.L): Current Liabilities Provisions 44.C) (C. Increase in Working Capital -------- 31.752 10.222 19.704 2.196 31.510 Total C. .12.66.AC.734 Applications Purchase of Fixed Asset Amount 3.C 1.732 Decrease in Working Capital 1.061 9.8 Sources Amount Reserves & Surplus 2.14.526 Secured &Unsecured Loans 8.A Current Liabilities(C.Total C. 11.20.L Net Working Capital(W.L) 19.27.571 Deferred Tax Liability FUNDS FLOW STATEMENT FOR THE YEAR 2008 TABLE NO: 4.733 31.86.732 STATEMENT OF CHANGES IN WORKING CAPITAL TABLE NO: 4.196 1.

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

y In 2008. It is to require raising short terms funds to solve the financial problems. 8. y Regularly use funds in purchase of fixed asset it make profitability. SUGGESTIONS y The company may increase their share capital it helps to get more strength in financial position. In 2008 it is decreased. The working -in. 7. The working capital is increased in 2005 to 2007 with a low variation in the year the working capital will be decreased.6. y Tax liabilities should also be maintained in a standard manner.progress rapidly increased by large variation with the amount. . the statement shows decreasing working capital in the company. The investment is increased year by year up to 2007.

CONCLUSION It can be concluded that in FOODS & INNS PRIVATE LTD The working capital in increased year by year except last year.I.P.The over all performance of FOODS &INNS PVT LTD is very good. And its main sources of funds are deferred tax liability. secured& unsecured loans. The main applications of funds are purchase of fixed assets & capital W. . 51.20.811 2.471 (4.922 1.142 31.98.574 .81.02.043 2.870 2.718 (1.92.461 1.06.097 48.868 54.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 61.326 2.741 5.64.351 53.511 1.76.974 29.26.798 11.160 4.588 16.825 97.863 68.636 45.29.894 3.384 1.969 1.101 7.562 ( 29.313 1.871 2.15.925 5.045 55.838 4.83.792 4.21.595 (+)Operating income Operating profit (-)Non-operating expenses (+)Non-operating income Profit / loss before tax (-)Provision for tax Profit / loss after tax (1.955) 3.278 2.204 52.

77.180 14.257 TOTAL CA 2.288 7.14.950 14.93.97.Fixed assets Capital work in progress TOTAL FA 3.499 . 1.33.361 19.827 33.13.747 2.Balance Sheet of Foods and Inns ltd. tax assets 5.726 4.665 75.571 41.61. provisions: 24.09.716 27.49.911 liabilities.000 12.685 69.72.Invesments 4.275 21.156 Sundry debtors 4.044 27.772 16.185 12.08.490 2.689 26.354 47.80.939 Loans & advances 40.685 77.450 61.29.661 Cash&bank balances 74.53.773 8.977 20.26.700 95.055 2.29.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: 1.70.Miscellanious expenditure TOTAL ASSETS(1+2+3+4+5) LIABILITIES: 6.Currentassets loans&advances Inventories 7.060 6.85.330 19.405 2.06.

22.398 87.40.257 1.50.772 23.36.918 18.75.688 3.60.558 1.798 9.60.963 62.185 1.94.94.Deffered tax liabilities TOTAL LIABILITIES(6+7+8+9) 7.28.704 62.54.028 3.793 19.64.231 1.76.998 1.85.65. Financial Management I. BIBLIOGRAPHY The following books and websites have been referred by me during my project work. 1.629 47.95.Loan funds: Secured loans Unsecured loans TOTAL 8.235 21.36.608 2.701 12.22.896 3.200 29.160 1.68.851 13.06.381 4.924 48.910 3.05.500 10.571 1.960 19.06.310 10.55.PANDY .71.22.348 69.78.98.Share holders funds: Share capital Reserves & surplus TOTAL 9.65.Current liabilities Provisions TOTAL CL 7.51.200 40.304 27.616 77.222 19.64.429 15.46.431 18.74.056 33.515 8.89.

Financial Management KHAN AND JAIN 3.COM .GOOGLE.FOODSANDINNS.KHAN WEB SITES WWW.2.Y. Management Accounting M.COM WWW.

Sign up to vote on this title
UsefulNot useful