Fund Flow Statement

Prof. Bharat Vira

Meaning of fund flow statement

 Fund simply means availability of cash in daily use.

 Funds Flow Statement is a statement prepared to analyse the reasons for
changes in the Financial Position of a Company between 2 Balance Sheets. It
shows the inflow and outflow of funds i.e. Sources and Applications
of funds for a particular period.
 In other word its prepare to explain the changes of working capital position of
the company.
 There are two types of Inflow of funds –
 1.Long term fundraised by issue of share, debenture or sale of fixed asset
 2.Funds generated from operations
Definition of fund flow statement

 A statement showing money coming into and

going out of a business in a particular period of
time, where this money came from, and what it
was used for.
objectives of fund flow statement

 To explain the changes in financial position

  To analyze the operational position
 To help in proper allocation of resources
 To evaluate financial position
 To act as future guide
Position of assets liabilities

•    Increase in current asset – increase in working capital.

•    Decrease in current asset – decrease in working capital.
•    Increase in current liability - decrease in working capital.
•    Decrease in current liability – increase in working capital.
The format of schedule of changes in
working capital
Profarma of fund flow statement