1.

1 Introduction
Introduction to Finance:
Finance is the study of how people, companies, and organisations handle their finances and
assets. It covers a wide range of topics, including personal finance, corporate finance,
investments, financial markets, and more.

Understanding finance is important because it can help you make informed decisions about your
own finances, such as budgeting, saving, and investing. It can also help you understand how
businesses and organizations make financial decisions, which can be useful if you work in a
related field or are interested in investing in stocks or other assets .

Financial Management:

Meaning:
Planning, organising, directing, and controlling financial resources to accomplish organisational
goals and objectives is referred to as financial management. It involves making decisions related
to the procurement and utilization of funds, as well as analyzing and interpreting financial
information to make informed decisions. Effective financial management helps organizations to
optimize their financial resources, minimize financial risks, and achieve their financial
objectives.

Objective of Financial Management:

The objective of financial management is to maximize shareholder wealth or value by making
sound financial decisions. This involves managing the company's financial resources in a way
that balances risk and profitability, while also ensuring the long-term sustainability of the
business. Financial management includes activities such as budgeting, financial planning,
investment analysis, risk management, and financial reporting. By effectively managing the
company's finances, financial managers can help ensure that the business remains competitive,
profitable, and able to meet its financial obligations.

Financial Decisions:
 There are several types of financial decisions that individuals and businesses make:
 Investment decisions: These decisions involve choosing where to invest money, such as
in stocks, bonds, mutual funds, or real estate.
 Financing decisions: These decisions involve how to obtain funding for investments or
operations, such as through loans, issuing bonds, or selling equity.
 Budgeting decisions: These decisions involve how to allocate income and expenses,
such as creating a personal or business budget and determining spending priorities.

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  Risk management decisions: These decisions involve identifying and mitigating
potential financial risks, such as purchasing insurance or diversifying investments.

Cash Flow Statement

The cash flow statement is a financial statement that provides information about the cash
inflows and outflows of a company during a specific period of time. It demonstrates the impact
of adjustments to balance sheet accounts and income on cash and cash equivalents. Operating
activities, investment activities, and financing activities make up the statement's three sections.
The operating activities section shows cash flows from the company's primary business
operations, the investing activities section shows cash flows from the purchase and sale of long-
term assets, and the financing activities section shows cash flows from the company's financing
activities, such as issuing or repurchasing stock and paying dividends. Investors and analysts
can evaluate a company's liquidity and financial health using the cash flow statement. It also
includes any financial withdrawals for investments and business expenses that were made
during a specified time frame.

Investors and analysts can see a picture of all business transactions in a company's financial
records, showing how each one contributes to the company's success. Because it tracks the cash
generated by the business in three key areas, the cash flow statement is said to be the most
understandable of all the financial statements. through operations, investment, and financing. In
order to compute net cash flow, sum the three elements collectively. Investors can estimate the
worth of a firm's stock or the company overall using these three main portions of the cash flow
statement.

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Advantages of Cash Flow Statement:

 Ascertaining Liquidity and Profitability Positions :

The cash flow statement can be used by management to assess the company's liquidity and
profitability.

The ability to pay a debt as soon as it becomes due is referred to as liquidity. Since a cash flow
statement shows a company's cash position at the time of a payment, it directly aids in
determining its liquidity status. The same is true when determining profitability. How well the
company pays its liabilities and expenses in various formats can be deduced from the cash flow
statement. Additionally, because this statement reveals a company's ability to generate cash,
profitability position also relies on this ability.

Ascertaining Optimum Cash Balance:

The cash flow statement can be used by management to assess the company's liquidity and
profitability. The ability to pay a debt as soon as it becomes due is referred to as liquidity. Since
a cash flow statement shows a company's cash position at the time of a payment, it directly aids
in determining its liquidity status. The same is true when determining profitability. How well
the company pays its liabilities and expenses in various formats can be deduced from the cash
flow statement. Additionally, because this statement reveals a company's ability to generate
cash, profitability position also relies on this ability .

Ascertaining Optimum Cash Balance:

The Cash Flow Statement aids in determining a company's ideal cash position as
well. A company may be able to assess its idle, excess, or lack of cash if the ideal
cash balance can be identified. The management can invest any excess cash after
determining the cash situation or borrow money from external sources in accordance with the
cash shortfall.

 Cash Management:

A correctly produced cash flow statement will allow for effective cash management. The

management may create an estimate of the various cash inflows and outflows, which will be

very useful for them as they make future plans.

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  Capital Budgeting Decisions:

Cash flow timing is crucial for this reason since capital budgeting deals with the decision of

capital spending in various ways over a lengthy period of time.

 Superiority over Accrual Basis of Accounting:

As a lot of technical adjustments are made in the case of accrual basis of accounting, there is

little doubt that the Cash Flow Statement or cash basis of accounting is more trustworthy or

dependable. Such problems do not exist in cash flow accounting.

 Planning and Co-ordination:

Cash Flow Statement is prepared on an estimated basis meant for the next year which helps the

management to know how much funds are required for what purposes, how much cash the

company can obtain from outside the company given the amount of cash it generates within. It

helps also to prepare cash budgets. With the use of this statement, management may organise
and coordinate various actions.

Movement of Cash:

The management can develop future estimates based on the information provided by the cash

flows in and out for various reasons in a cash flow statement.

Performance appraisal:

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The management can assess or analyse the cash-related performance by contrasting the actual
and projected Cash Flow Statements. If an adverse variance is discovered, the cause is
determined and corrected appropriately.

Methods of Cash flow Statement:

The direct technique and the indirect approach are the two ways to create a company's cash flow
statement.

Direct Method:
This first approach is based on transactional data that affected cash flow throughout the studied
period. This approach entails integrating all operating activity inflows and deducting all
operating activity outflows.

Indirect Method:
The indirect technique is based on accrual accounting and is the second approach. The
accountant of a corporation generally does not record revenue and expenditures at the precise
moment of cash transactions. The cash flows from operational operations as a result of these
accruals and adjustments are different from the net income.

The accountant starts with the net income from the income statement and makes adjustments to
offset the effect of accruals and deferrals during the period. This is known as the indirect
approach. Once all the non-cash expenses for the analysis period have been identified (such as
depreciation, asset write-downs, and amortisation), the net income must then be transformed
into a real cash flow. Or transfers made across a number of accounting periods).

Types of Cash Flow Statement:

An income statement includes cash flow in a number of different ways. Operating cash flow,
investing cash flow, and financing cash flow are the three main types of cash flow that business
owners deal with. Here’s how they differ:

 Operating cash flow

 Investing cash flow
 Financing cash flow

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1. Operating cash flow
The income from sales and outflows from salaries, vendor fees, lease payments, taxes, and
interest payments provide a picture of a company's ongoing operating activity. A company is
cash flow positive if sales outpace operational costs.

2. Investing cash flow

Money associated with long-term investments is referred to as cash flow from investing
activities (CFI). A company's investing cash flow is negative (more money is going out than is
coming in) when it invests, let's say, in a start-up. A company's investing cash flow is positive
when it sells its start-up shares to recoup its investment.

3. Financing cash flow

The net cash associated to the financing activities that support many businesses is referred to as
financing cash flow, or cash flow from financing activities (CFF). In order to raise funds for
running costs, some businesses offer ownership shares to investors. Some financial operations
generate revenue, such as the sale of bonds, while others spend cash, such as dividend payments
and stock buybacks from investors. In the total cash flow management of some start-up
businesses, financing cash flow will be more important than operating cash flow.

Cash Flow from Operating Activity- Direct Method

Actual Cash Receipts from Operating Revenues and Actual Cash Payments for Operating
Activities are ordered and shown in the Cash Flow Statement when creating it using the Direct
Method. The Direct Method's Net Cash Flow from Operating Activities is the difference
between Cash Receipts and Cash Payments. To put it another way, it is an Income Statement
(Profit & Loss A/c) generated using the Direct Method and Cash Basis.

Particulars Amount
Cash Receipts from Customers xxx

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 Cash Paid to suppliers and employees (xxx)
Cash generated from Operations xxx
Income Tax Paid (xxx)
Cash Flow before Extra-ordinary Items xxx
Extra-ordinary items xxx
(Direct Method) Net Cash from Operating Activities xxx xxx

Cash Flow from Investing Activities

Investment operations include the buying and selling of long-term assets as well as other
investments that aren't cash equivalents. It's crucial to disclose cash flows from investing
activities separately because they show how much money has been spent on resources that are
supposed to produce income. Future income and cash flows .

Particulars Amount
Purchase of Fixed Assets (xxx)
Add) Fixed Asset Fixed Asset Fixed Asset xxx
(Add) Interest received xxx
(Add) Dividend received xxx
Net Cash Flow from Investing Activities xxx

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Cash Flows from Financing Activities
Financing operations are those that alter the amount and makeup of the organization's owner
capital as well as its borrowing. It is crucial to disclose cash flows from financing operations
separately since doing so helps to foresee the claims that the funders will make on future cash
flows.

Particulars Amount
Proceeds from Issue of Share Capital Xxx

Proceeds from Long Term Borrowings Xxx

Repayment of Long Term Borrowings (xxx)

Interest Paid (xxx)

Dividend Paid (xxx)

Net Cash Flows from Financing Activities xxx

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The full Cash Flow Statement is presented in the following Comprehensive
Format:-

Particulars Amount
Cash flow from Operating Activities (Direct Method) xxx
(Add) Cash Flow  from Investing Activities xxx

(Add) Cash Flow from Financing Activities xxx

(=)Net Increase/Decrease in Cash xxx

(Add) Opening Balance of Cash & Cash Equivalents xxx

(=) Cash and Cash Equivalents at Closing xxx

1.2 Industry Profile

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An independent trust known as Tirumala Tirupati Devasthanams (TTD) oversees the
management of several temples, including the Tirumala Venkateswara Temple in Andhra
Pradesh. The wealthiest and busiest religious complex in the world has its operations and
finances managed by the trust. Additionally, it participates in a variety of literary, social,
religious, and educational endeavours. TTD has 16,000 employees overall and is based in
Tirupati.

Establishment and legislative setting

The TTD Act of 1932 led to the creation of TTD in 1932. According to the statute, a committee
of seven people including a paid commissioner chosen by the Madras government was in charge
of managing the temple. Two advisory councils provided guidance to the committee: one was
made up of priests and temple officials to assist with the administration of the Tirumala temple,
and the other was was formed by farmers to offer advice on Tirumala's real estate and land
transactions. The reach of TTD's application was broadened by the Andhra Pradesh Charitable
and Hindu Religious Institution and Endowments Act (1969). The number trustees was
increased from five to eleven with the requirement that certain communities be represented. In
addition to the duties outlined in the preceding act, Devasthanam was required to advance
Hindu Dharma through research, teaching, training, and literature creation. The A.P. The 1979
law was replaced by the Charitable & Hindu Religious Institutions & Endowments Act (1987).
The Board of Trustees' maximum membership was extended from eleven to fifteen, and temple
priests' hereditary privileges and the ability to receive a share of the hundi proceeds were
abolished. The AP administration amended the act in 2006 to remove these two contentious
paragraphs in response to prolonged and growing pressure from the priests. Before accessing
the hill temple, non-Hindus are required to submit a declaration form expressing their belief in
the presiding deity, Lord Venkateswara .

Temples under TTD administration

1. Tirumala's Venkateswara Temple and Tirumala's List of Temples are its two main
articles. Deities of Tirupati
2. Tirumala Lord Venkateswara Temple, Tirumala, is largely managed by Tirupati
Devasthanams Trust. In addition, it oversees a large number of temples in Tirupati and
elsewhere. The temples consist of both old and brand-new ones that TTD itself built.
3. Sri Padmavathi Ammavari Temple
4. Sri Govindarajaswamy Temple
5. Sri Venkateswaraswamy Temple, Tirumala
6. Sri Kalyana Venkateswara Swamy Temple
7. Sri Kondanda Ramaswamy Temple
8. Sri Kalyana Venkateswara Swamy Temple, Narayanavanam

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 9. Sri Veda Narayanaswamy Temple
10. Sri Chandramouliswara Swamy Temple
11. Sri Prasana Venkateswara Swamy Temple, Appalagunta

Departments
The TTD has nearly every department that would be found in a typical government, including
production (laddus), engineering (dams and roads), water supply, human resources,
transportation, procurement and marketing, finance together with revenue, general
administration, accounting, public relations, information technology, parks and gardens,
educational institutions, and hospital

Services
Production (laddus), engineering (dams and roads), water supply, human resources,
transportation, procurement and marketing, finance and accounting, public relations,
information technology, forest and gardens, educational institutions and hospitals, revenue, and
general administration are just a few of the departments that make up the TTD. In regional
languages, Hindi and English. To spread the Hindu dharma, the Dharma Prachara Parishad was
founded. In the fields of traditional sculpture and architecture, temple renovation and
reconstruction, and Hindu sculpture restoration, TTD also contributes to preserving India's rich
cultural legacy. Tata Consultancy Services has designed and executed the software and
hardware infrastructure for managing the massive crowds by evaluating and implementing
complex queueing algorithms.

Every month's ticket release schedule has been made available by TTD.
[8]

Darshan Type

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Special Entry Darshan (Rs. 300/-) tickets

Electronic Dip Registration for

(Suprabhatham, Thomala, Archana, and Astadala Pada Padmaradhana) Arjitha Sevas

Payment for Dip Registration if ticket gets alloted

Arjitha Sevas (Kalyanostavam, Arjitha Bramhostavam, Unjan Seva, and Sahasra

Deepalankarana Sevas) are available both virtually and physically.

Seniors, physically handicapped people, SriVani, and Angapradhakshinam quota

Online Tirupati Accommodation Quota

Online Tirumala Accommodation Quota

Tirumala Tirupati Devasthanams, Tirupati Panchagavya products (Namami

Govinda)
To preserve and advance the indigenous cow breeds, TTD has launched a number of projects.
Due to the fact that it is the dwelling place of all the Gods, the cow is regarded as the most
fortunate and holy animal in Vedic culture. The five (pancha) products derived from cows are
referred to as "Panchagavyas" and are frequently employed in Ayurveda due to their therapeutic
efficacy. For the benefit of humanity, the TTD has begun producing "panchagavya" goods.
Each item sold under the "Namami Govinda" brand has been thoughtfully planned and made,
with ingredients obtained from the native breed cows cared for by TTD.

Dhupams

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The five goods made under the fumigation category are Avani Dhupa churnam, Dharani
Agarbathi, Dhatri sambrani cups, Vaishnavi Dhupa sticks, and Varahi Dhupa cones. These safe-
to-use dhupa products are made from cowdung, agaru, and neem. The smoke they emit has anti-
microbial properties and purifies the environment.

Prithvi Vibhuti

By burning cow dung, "Durva" (a grass type dedicated to Ganesh), camphor, and cow ghee,
traditional methods are used in "pancha bhutatmaka Homa gundas" to produce the vibhuti.
Applying vibhuti across the front of the head is lucky and beneficial to your health.

Dhanshika tooth powder

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The constituents in this tooth powder include cowdung ash, rock salt (Saindhava lavan), cloves
(Lavang), amalaki (Indian myrobolan), and other herbs. It is made in accordance with traditional
Ayurvedic methods. The mouth, gums, and teeth will be kept healthy by using tooth powder on a
regular basis.

Hiranmayi Herbal face pack

By using the herbal face pack on the face, which is made of herbs like turmeric (Haridra),
manjista, and lodra, you can get rid of your acne, blackheads, and whiteheads.

Mahi Herbal soap:

He soap is made from cow urine distillate, nalpamaradi tailam, herbs, and natural scents. It is
designed to protect the skin, enhance its radiance and colour, reduce the risk of acne, and get rid
of skin-damaging bacteria.

Kashyapi herbal shampoo

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Hikakai, coconut oil, and natural scent are used in its traditional 1safeguard the hair and stop
dandruff, use this natural hair wash and conditioner.

Nandini Go-arka

Freshly collected cow urine from local breeds is distillated using an arka yantra (distillation
plant), and the vapours are then condensed into distilled. Go-arka is used internally to prevent
cancer, respiratory issues, and skin conditions. Regular consumption of this increases the length
and quality of life of healthy people.

AGARBATHIS

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 According to the Sanatana Dharma, offering the Dhupa to God in daily devotion is
fortunate, sanctifies the surroundings, and fosters a spiritual environment. Offering incense sticks
is a crucial part of Indian custom in both routine family pujas and extraordinary rites. At
Tirumala and other TTD temples in Tirupati, the presented flowers (Nirmalya-pure) to Srivaru
are gathered daily and utilised to make seven different sorts of agabrathis. (Incense sticks).

PHOTO-FRAMES & OTHER PRODUCTS

he flowers (Nirmalya-pure) that are donated to Srivaru at Tirumala and other TTD temples of
Tirupati are also used for other noble purposes, such as making photo frames of the Lord,
keychains, paper weights, money, and pen stands utilising dried flower technology under the
heading "Pushpa prasadam." Under the technical guidance of Dr. YSR Horticultural University,
Tirupati, a unique concept for the preservation of the most auspicious presented flowers with
devotees in various forms has been developed.

1.3 COMPANY PROFILE:

The partnership firm Somayajulu & Associates, which was founded on April 1, 2004, is 19 years
and two months old. Its registered office is at 7-1-9, Ananda Nilayam, R N Mada Street,
Tirupati, Andhra Pradesh.

Services, which are divided into legal and accounting activities and consist mostly of accounting
bookkeeping and auditing services, are Somayajulu & Associates' main business activity.

The financial year 2020–21 is designated as a Micro enterprise for Somayajulu & Associates. It
has its unit situated at Tirupati, Andhra Pradesh.

SERVICES:
1. CORPORATE SERVICES

2. AUDIT SERVICES

3. CORPORATE FINANCE

4. SERVICES FOR NON-RESIDENTS

5. ACCOUNTING SERVICES

6. PAYROLL

7. BENEFITS OF OUTSOURCING
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8. INCOME TAX

9. GST

10. CORPORATE GOVERNANCE

11. TDS

OVERVIEW - SOMAYAJULU & COMPANY LIMITED:

An unlisted public corporation called Somayajulu & corporation Limited was established on
March 7, 1994. It is based in Chennai, Tamil Nadu, and is categorised as a public limited
company. It has a 9.00 crore rupee authorised share capital the total paid-up capital is INR 9.00
cr. Somayajulu & Company Limited's current status is Active. According to our data,
Somayajulu & Company Limited's most recent recorded AGM (Annual General Meeting) took
place on November 29, 2021 Three people serve as directors for Somayajulu & Company
Limited: Jandhyala Lakshminarayana Sharma, Govind Sashi Kumar, and others.

The Corporate Identification Number (CIN) of Somayajulu & Company Limited is

U65993TN1994PLC026971. First Floor, Siyat House, No. 961, Poonamallee High Road,
Chennai, Chennai, Tamil Nadu is the location of Somayajulu & Company Limited's registered
office.

DIRECTORS - SOMAYAJULU & COMPANY LIMITED:

The company has 3 directors and no reported key management personnel. The longest serving
director currently on board is Jandhyala Lakshminarayana Sharma, who was appointed on 07
March, 1994. For more than 29 years, Jandhyala Lakshminarayana Sharma has served on the
board. The most recently appointed director is Govind Sashi Kumar, who was appointed on 23
May; 2017.Vidya Subramanian has the largest number of other directorships with a seat at a total
of 6 companies. The corporation has connections to 8 additional businesses through its directors.

1 Jandhyala Lakshminarayana Sharma (07-03-1994).

2 Vidya Subramanian (10-02-2016).
3 Govind Sashi Kumar (23-05-2017).

HOW TO USE COMPANY NETWORK OF SOMAYAJULU & COMPANY

LIMITED:
Toffler Company network is a powerful feature that allows you to explore and discover common
directorships between companies. It helps you find out other directorships of an Indian director
and where else he has business interests. The feature is available for unlimited use in
Company360 platform. Here is the video showing how you can explore company networks to
discover hidden relationships between companies.

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 2. Review of Literature
Trotman and Gibbins (1987): Questions about the property, plant, and use of food, what is the
cost basis for the guidelines. The source of the money and the things' money are changes to the
computer programme. This idea allowed us to sell non-cash or non-cash assets. is outlined as the
earnings, costs, and labour charges.

Roger Hussey & Andra Ong (1988): Generally speaking, the flow of money used for economic
and financial progress.

Adhikari and Duru (1989): It cannot cut operating expenses, implying a reduced pay rate. They
have funds to help them not be able to produce the product, given the level of investment rate
needed to calculate this amount They pay on investments and credit to reduce the amount of
money needed for a post-lease payment, while at the same time choosing the options for
understanding the remaining free cash flow will be linked to the free cash flow.

PhD. Prof. Ioan Batrancea (1990): Financial reporting is crucial for the development of future
cash flow in a newsletter. But it is important in analysing future cash flow data that cannot be
elucidated. But researchers have been trying to figure out how it feels like in the future and the
value of money.

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Charles, E. Jordan and Marilyn A. Waldron (1993): Based on payout interference for future
wearable shoes, which is believed to be a good fit. As a result, financial managers, other users,
and some base complete financial statements would all benefit.

Melik Serhat (1994): This is a component of the construction sector since the cash flow of these
projects carries the highest amount of risk, has the largest network, and is crucial. As such, it is
important to consider changes in payment planning conditions for construction projects and the
risk of uncertainty about cost control and methodology. The purpose of the study was to
understand the nature of cost-effectiveness and planning, as well as of course the involvement
and surprise of some theoretical models and applications of real-time optimization models.

Ortpurt & Zang (1995): Pay-per-view predictions start to happen, especially in indirect ways.

Ooghe and prijcker (1996): reports that companies with low cash flow are more prone to
experience liquidity issues, and that having a high leverage ratio always results in financial
trouble. Muller et al (2009) developed a model of business failure using cash flow metrics
utilising financial statement information from companies registered on the Johannesburg Stock
Exchange. The model 376 succeeded in a accurately classifying 77 percent of sample firms.

Bhandari and lyer (1997): Analyzed the usefulness of measures based on cash flow statement
in the prediction of business failure by using a sample consisting of 50 failed and 50 non-failed
firms during the period between 2008 and 2010. They developed an empirical model that
accurately categorises 79.5% of the sample enterprises. Barua and saha (2015) compared the
usefulness of cash flow measures and traditional measures in the prediction of financial strength
of firms listed on Dhaka stock Exchange. The empirical analysis uses fifteen cash flow measures.
They came to the conclusion that cash flow measurements are superior to conventional measures
as gauges of financial health.

Almamy et al. (1998): Employed a discriminant model to analyse the financial health of firms
operating in the united kingdom. They discovered that the Z-score adjusted by adding cash flow
variables gives better results for financial market participants by studying the data of 90 failing
businesses. Shamsudin and kamaluddin (1998) analysed the cash flow patterns of sixty-two
failure firms and sixty-two non-failed firms operating in Malaysia. They found that firms
suffering from unstable cash flow pattern are more likely to go bankrupt.

Rujoud et al. (2000): Examined the structure of cash flow statement of 33 nonfailed firms. They
claimed that cash flow measures outperform accruals based measures in the prediction of
business failures and the predictive power of accrual based measures significantly increases

19
when cash flow measures are added. Stice et al. (2017) claimed that many profitable firms went
bankrupt due to cash flow problems. They suggested that firms should effectively analyse the
structure of cash flow statement to succeed to succeed their strategic objectives.

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 Chapter – 3
3. Research Methodology

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 3.1 Need of the study
 For a business to be successful, it should always have sufficient cash. This enables it to
pay back bank loans, buy commodities, or invest to get profitable returns.
 A business is declared bankrupt if it doesn’t have enough cash to pay its debts. Here are
some of the benefits of a cash flow statement:

Gives details about spending: 

 A cash flow statement gives a clear understanding of the principal payments that the
company makes to its creditors.
 It also shows transactions which are recorded in cash and not reflected in the other
financial statements. These include purchases of items for inventory, extending credit to
customers, and buying capital equipment.

Helps maintain optimum cash balance:

 A cash flow statement helps in maintaining the optimum level of cash on hand. It is
important for the company to determine if too much of its cash is lying idle, or if there’s a
shortage or excess of funds.
  If there is excess cash lying idle, then the business can use it to invest in shares or buy
inventory. If there is a shortage of funds, the company can look for sources from where
they can borrow funds to keep the business going.

Helps you focus on generating cash:

 Profit plays a key role in the growth of a company by generating cash. But there are
several other ways to generate cash.
  For instance, when a company finds a way to pay less for equipment, it is actually
generating cash. Every time it collects receivables from its customers quicker
than usual, it is gaining cash.

Useful for short-term planning:

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 A cash flow statement is an important tool for controlling cash flow. A successful
business must always have sufficient liquid cash to fulfil short-term obligations like
upcoming payments.
   A financial manager can analyse incoming and outgoing cash from past transactions to
make crucial decisions. Some situations where decisions have to be made based on the
cash flow include foreseeing cash deficit to pay off debts or establishing a base to request
for credit from banks.

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 3.2 Scope of the Study

Scope of Cash Flow :

1. An enterprise should prepare a cash flow statement and should present it for each period for
which financial statements are presented.

2. Users of an enterprise’s financial statements are interested in how the enterprise generates and
uses cash and cash equivalents.

3. This is the case regardless of the nature of the enterprise’s activities and irrespective of
whether cash can be viewed as the product of the enterprise, as may be the case with a financial
enterprise.

4. Enterprises need cash for essentially the same reasons, however different their principal
revenue-producing activities might be. They need cash to conduct their operations, to pay their
obligations, and to provide returns to their investors.

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 3.3 Objectives of the Study
The main objectives of preparing a cash flow statement are as follows:

 Useful for Short-term Financial Planning: 

 A cash flow statement helps an organisation by providing it with information for
planning its short-term financial needs.
 As this statement provides information regarding the different sources and applications
of cash during a specific time period, it makes the assessment of a firm’s financial
position easier.
 Organisation can know whether or not it will have sufficient cash to meet its day-to-day
expenses and pay the trade payables in time.
 Whether or not Organisation has enough cash for payment for the purchase of fixed
assets, and whether or not it will have enough cash with it to pay the long-term loans and
interests thereon. 
 Useful in Preparing the Cash Budget:
 An organisation can also use a cash flow statement prepared for the future, for the
preparation of its cash budget.
 The management with the help of a cash flow statement can know about the surplus or
deficit period of cash; i.e., in which months the cash receipts will be more than cash
payments and in which months the cash payments will be more than cash receipts.
 Thus, it helps in planning the investment of surplus cash in different short-term
investments and also helps in planning short-term credit in advance for deficit periods. 

 Comparison with the Cash Budget:

 A cash budget is prepared at the beginning of the year; however, a cash flow statement is
prepared at the end of the year.
 By making a comparison between the cash budget and cash flow statement, an
organisation can ascertain the extent to which its financial resources have been
generated and used according to the plan made in cash budget.
 With comparison an organisation can analyse the causes of variation between the figures
of these two statements and can take proper corrective measures. 
 Study of the Trend of Cash Receipts and Payments:
 A cash flow statement reveals the speed at which the current liabilities are being paid
and cash is being generated from inventory, trade receivables, and other current assets
by the company.

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 By doing so, the management of the company can easily assess its true position of cash
in future. 

 Explains the Deviations of Cash from Earnings:

 It is quite possible that a firm is earning huge profits, yet it lacks cash. Similarly, it is
also possible that a firm is suffering losses, yet it has plenty of cash with it.
 A cash flow statement helps the user in understanding the reason behind it by describing
the deviation of its cash from earnings . 

6. Useful to Outsiders:

 A cash flow statement not only helps the organisation (insiders), but also the outsiders
such as bankers, shareholders, lenders, creditors, etc.
 The outsiders can easily analyse the financial position of the organisation and can take
proper decisions on the basis of the analysis.

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 3.4 RESEARCH METHODOLOGY

The researchers only "scientific research", according to Rodman, for the systematic study of
"new science", some people may be seen as a measure of investigation; this discovery is the true
path. According to Clifford Woody, problems and the solutions proposed theories, research, or to
make decisions, data, and analysis and, finally, they recommended the understanding that
distinguishes the latest empirical findings

For many types of research methods and not the only method to use, as well as their technical
skills to explain and describe the logic behind the methods used in context, to ensure accuracy, it
is the result of legislation, research results. The word search is the search for something new, can
solve the problem. Investigators discovered that the purpose of the study

Two of the properties of this project possible, analysis of the data in the financial report, the
company records, the basic information, the annual report, and annual report profit or loss
Energy Projects Ltd. implemented through a collection of scientists. The Company uses the
information for analysis and interpretation of financial instruments.

TYPES OF RESEARCH DESIGN:

 Experimental research design
 Exploratory research design
 Descriptive &Diagnostic research

Exploratory Research Design:

According to the study researchers, researchers, scientists, and got another idea, then this issue.

Descriptive Research Design:

This is why, who, what, and what questions to answer. And based on some of the theories about
the past.

Sources of data:
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There are two types of data:

 Primary Data
 Secondary Data

Secondary Data:
Data that has previously been gathered from primary sources and made easily accessible for
academics to use for their own research is known as secondary data. It is a category of
information that has previously been gathered.

The information may have been gathered by one researcher for a specific study and then made
available for use by another researcher. As in the case of the national census, the information may also
have been gathered for general use without a specified study goal. Data that is categorised as secondary
for one research may be main for another. When data is reused, it becomes primary data for the first
research it is used in and secondary data for the second research it is used in.

Sources of Secondary Data

Books, private sources, journals, newspapers, websites, government documents, etc. are
examples of secondary data sources. Compared to primary data, secondary data are thought to be
easier to find. Utilising these sources requires relatively little investigation and labour.

The development of electronic media and the internet has made secondary data sources more
widely available. Below are some of these sources highlighted.

 Books

* One of the oldest methods of data collection is through books. There are books available
today on any subject you can imagine. 
*  To conduct research, all you need to do is look for a book on the subject and choose it
from the library's selection of resources.

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* When carefully picked, books can be a reliable source of reliable information and be
helpful in creating a literature review.

 Published Sources

* For many study areas, a range of published sources are accessible. The author and
publishing company have a significant impact on the veracity of the data derived from
these sources.
* Depending on the situation, published sources might be either printed or digital.
Depending on the discretion of the author and publishing house, they could be
compensated or free.

 Unpublished Personal Sources

* Compared to published sources, this could not be simply accessible and immediately
available.

* Only if the researcher shares them with another researcher who isn't allowed to share
them with a third party do they become available.

* For instance, a company's product management team would require information on

customer feedback to gauge what customers think of their product and get suggestions for
improvement.

* They must obtain the information from the customer service division, which primarily
gathered the information to enhance customer service.

 Journal

* In terms of data collecting nowadays, journals are quickly overtaking books in

importance. This is so that they can provide up to date information since journals are
frequently updated with new publications.

* Additionally, when it comes to research, journals are typically more explicit. An article
on "Secondary data collection for quantitative data" might appear in a journal, but
"Secondary data collection" might be the sole subject of a book.

 Newspapers

* The majority of the time, news reported in a newspaper is highly trustworthy. As a result,
it ranks as one of the most reliable sources for gathering secondary data.

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* Newspapers frequently provide information that is primarily political, economic, and
educational rather than scientific. Newspapers might not be the ideal source for gathering
scientific data as a result.

 Websites

* Since most information posted on websites is unregulated, it may not be as reliable as

information from other sources.

* Some controlled websites, on the other hand, exclusively share real information and may
be relied upon by researchers.

* The majority of these websites are typically run by the government or by for-profit
businesses that collect data.

 Blogs

* One of the most popular internet data sources is blogs, which may even be less reliable
than websites.

* Nowadays, almost everyone has a blog, and many people use them to promote their
websites or generate income from paid advertisements.

* Therefore, they cannot always be trusted. For instance, a blogger may post positive
reviews of a product even if they are untrue since they were compensated to do so by the
maker.

 Diaries

* Since they are private documents, researchers rarely use them to gather data.
Additionally, diaries are typically private, with the exception of the modern practise of
sharing public diaries that detail certain life events.

* Anne Frank's diary, which provided an authentic account of the Nazi wars, is a typical
illustration of this.

 Government Records

* A crucial and reliable source of secondary data is public records. They contain data that
can be used in study in the humanities, management, and social sciences.

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 * These documents include, among others, census data, health records, and records from
educational institutions. They are typically gathered to help with effective planning,
funding distribution, and project prioritisation.
* Depending on the situation, published sources might be either printed or digital.
Depending on the discretion of the author and publishing house, they could be
compensated or free.

 Podcasts

* These days, podcasts are progressively becoming very popular, and many people use
them as an alternative to radio. They are becoming more and more popular, and they
resemble online radio stations in many ways.
* Typically, information is shared during podcasts, and viewers can utilise it as a method of
information gathering.

Some other sources of data collection include:

 Letters
 Radio stations
 Public sector records.

 Statement of Purpose

* You must be aware of your statement of purpose prior to gathering secondary data for
analysis. That is, having a solid knowledge of the purpose behind the data collection, the
overall goal of the study, and how the data will contribute to achieving that purpose.

* This will guide you in picking the optimal data source, analysis method, and data
collection strategy.

 Developing the Research Questions

Knowing the aim of your study is not enough; you also need to create research questions that
will make it easier to find secondary data. This is due to the fact that they frequently provide a
selection of data, and asking the proper questions will help get accurate information.

For instance, a researcher aiming to gather information on the best fish feeds to promote rapid
growth in fish will need to know what kind of fish is taken into consideration. Are you looking
for qualitative or quantitative data? What exactly is in the fish food? the rate at which fish
develop after consuming it, etc.

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32
 3.5 Limitations of the Study

1. Not Suitable for Judging the Liquidity:

 As a result of the fact that an organization's liquidity is not only dependent on its cash
balances, a cash flow statement does not accurately depict an organization's liquidity.
 A cash flow statement conceals the true picture of a company's ability to pay its debts
when they become due by excluding assets that can be converted into cash quickly,
which affects a firm's liquidity.

2. Possibility of Window Dressing:

 Window dressing refers to faking better and more accurate claims from an entity.
 As an organisation may readily manipulate its records by delaying purchases and
payments and fast collecting cash from its trade receivables before the balance sheet date,
the likelihood of window dressing funds in the cash flow statement is significantly
higher.
 A fund flow statement, as opposed to a cash flow statement, provides a more accurate
representation of a company.

3. Ignores Non-cash Transactions:

 A cash flow statement ignores any non-cash activities such as the issuance of bonus
shares, the acquisition of fixed assets through the issuance of debentures or shares, etc.
 Therefore, using a cash flow statement to evaluate a company's genuine status is
impossible.

4. Ignores the Accrual Concept of Accounting:

 A cash flow statement ignores any non-cash activities such as the issuance of bonus
shares, the acquisition of fixed assets through the issuance of debentures or shares, etc.
 Therefore, using a cash flow statement to evaluate a company's genuine status is
impossible.

5. No Substitute for an Income Statement:

 Similar to an income statement, a cash flow statement does not account for both cash and
non-monetary activities and is not a replacement for one.
 Additionally, it implies that net cash flow is not the same as the company's net profits.

6. Historical in Nature:

33
 A cash flow statement provides historical information since it is constructed using two
comparable balance sheets from prior years.
 Therefore, if a predicted cash flow statement is included, a cash flow statement can offer
important information.

4. Chapter
Data Analysis and Interpretation

34
Cash Flow Statement for V Immediate Previous Years:
Particulars 2022-23 2021-22 2020-21 2019-20 2018-19
Cash flows from operating activities
Cash receipts from customers (A) 6,860.68 4,354.95 3,910.62 4,402.29 4,430.51
Cash paid to suppliers and employees (B) -3,844.70 -3,269.33 -3,629.42 -4,052.02 -3,019.42
Cash generated from operations (A-B) 3,015.97 1,085.62 281.2 350.27 1,411.09
Income taxes paid -83.84 -40.48 -47.6 -57.63 -33.56
Net cash from operating activities…...(1) 2,932.13 1,045.14 233.6 292.65 1,377.53
Cash flows from investing activities - - - - -
Purchase of fixed assets -12.27 -21.67 -1.4 -0.3 -10.9
Proceeds from sale of equipment - - - - -
Interest received 231.89 16.51 18.11 32.43 13.48
Dividends received - - - - -
Net cash from investing activities…....(2) 219.62 -5.16 16.71 32.13 2.58
Cash flows from financing activities - - - - -
Proceeds from issuance of share capital - - - - -
Proceeds from long-term borrowings 6,751.49 6,337.97 2,200.83 4,878.23 3,391.79
Repayment of long-term borrowings -6,750.37 -6,325.63 -2,298.21 -4,911.08 -3,390.56
Interest paid - - - - -
Dividends paid - - - - -
Net cash used in financing activities…...(3) 1.12 12.34 -97.38 -32.85 1.23
Net increase in cash and cash equivalents…
3,152.87 1,052.32 152.93 291.93 1,381.34
(1+2+3)

Working Notes:
1.Cash flow from operating activities

 Cash Receipts from Customers:

Sales xx
Add: Sundry debtors at the beginning of the year xx
Less: Sundry debtors at the end of the year (xx)

35
  Cash paid to suppliers and employees

Cost of sales xx
Administrative and selling expenses xx
Add: Sundry creditors at the beginning of the Year xx
Inventories at the end of the year xx
Less: Sundry creditors at the end of the year (xx)
Inventories at the beginning of the year xx
 Income taxes paid:
Add: Income tax liability at the beginning of the year xx
Less: Income tax liability at the end of the year (xx)

2.Cash from Investing Activities:

 Purchase of Fixed Assets (xx)

 Sale proceeds from Assets xx
 Interest Received xx

3.Cash from Finance Activities

 Proceeds from Long term Borrowings xx

 Repayment of long term Borrowings (xx)
 Interest Paid xx

36
Chart Analysis of Cash flows:

Chart Title

3,500.00

3,000.00

2,500.00

2,000.00

1,500.00

1,000.00

500.00

0.00
2022-23 2021-22 2020-21 2019-20 2018-19

Increase or Decrease in Cash Flow:

In the year of 2022-23

37
 =net cash flow in 2022-23 – Net cash flow in 2021-22/cash flow 2021-22

=3152.87-1052.32/1052.32

=1.99611335 (Increase in Cash flow)

In the year of 2021-22

=net cash flow in 2021-22 – Net cash flow in 2020-21/cash flow 2020-21

=1052.32-152.93/152.93

= 5.881056693 (Increase in Cash Flow)

In the year of 2020-21

=net cash flow in 2020-21 – Net cash flow in 2019-20/cash flow 2019-20

=152.93-291.93/291.93

= -0.476141541 (Decrease in Cash Flow) **

In the year of 2019-20

=net cash flow in 2019-20 – Net cash flow in 2018-19/cash flow 2018-19

=291.93-1381.34/1381.34

= -0.788661734 (Decrease in Cash Flow) **

** Decrease in Cash Flows due to Covid.

Ratio Analysis:
1. Current liability coverage ratio

Operating cash flow ratio = cash flow from operating activities (CFO) / average
current liabilities

=2932.13/6762.64

= 0.433577715

2. Cash flow coverage ratio

Cash flow coverage ratio = net cash flow from operations / total debt

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 =3152.87/6750.32

= 0.46706625

3. Cash interest coverage ratio

Interest coverage ratio = earnings before interest and taxes / interest

=6860.68/231.89

= 29.58592436

4.Operating Cash Flow Ratio

Operating cash flow Ratio=Net cash flow from Operations/Current Liabilities

=3152.87/6762.64

=0.466218814

39