 FUNDS : WORKING CAPITAL  FLOW OF FUNDS: THE TERM FLOW MEANS CHANGE AND THEREFORE THE TERM FLOW OF FUNDS MEANS “CHANGES IN FUNDS” OR “CHANGES IN WORKING.

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Presentation transcript:

 FUNDS : WORKING CAPITAL  FLOW OF FUNDS: THE TERM FLOW MEANS CHANGE AND THEREFORE THE TERM FLOW OF FUNDS MEANS “CHANGES IN FUNDS” OR “CHANGES IN WORKING CAPITAL”. IN OTHER WORDS, ANY INCREASE OR DECREASE IN WORKING CAPITAL MEANS “FLOW OF FUNDS”.

Current assets Cash in hand and bank Marketable investments Accounts receivables Stock Prepaid exp. Fixed assets Goodwill Land and building Plant and machinery Long term investment Current liabilities Bank overdraft Outstanding expenses Accounts payable Fixed liabilities Share capital Reserve and surplus Debentures Long term loans Flow in fundNot flow in funds

USES OF FUNDS FLOW  WHY THE LIQUED POSITION OF THE BUSINESS BECOMING MORE AND MORE UNBALANCED IN SPITE OF COMPANY IS MAKING MORE AND MORE PROFITS.  WHERE HAVE THE PROFIT GONE  WHAT WILL BE THE SOURCES FOR DIVIDEND IF COMPANY IS NOT EARNING SUFFICIENT PROFIT  WHAT ARE THE SOURCES OF REPAYMENT OF THE LOAN TAKEN  HOW MUCH FUNDS GENERATION THROUGH NORMAL BUSINESS OPERATION.

 IN WHAT WAY THE MANAGEMENT HAS UTILIZED THE FUNDS IN THE PAST AND WHAT ARE GOING TO BE LIKELY USES OF FUNDS ?

Funds flow Analysis This statement is based on the ‘working Capital’ concept of funds. It measures the inflows and outflows of working capital resulting from different transactions. Funds flow statement measures and presents in an analytical manner the summarized version of the numerous flows of funds for a specific period. ‘Funds Flow’ is the change in ‘Working Capital’

Schedule Of Changes In Working Capital

CALCULATION OF FUNDS FROM OPERATION FUNDS FROM OPERATION OPENING BAL. OF P&L A/C NIL (-) NON FUND CR Transfer Of R/S 2.56Depreciation On Fixed Assets (+) Non Fund Items Closing Balance Of P&L A/c

TOTAL BORROWINGS LONG TERM LOANS 2.56SALE OF FIXED ASSET 486Investments220.07FUNDS FROM OPERATION Increase In WC49ISSUE OF CAPITAL AMT.APPLICATIONAMT.SOURCES Funds Flow Statement

Cash Flow Analysis Cash flow includes cash inflows and outflows – cash receipts and cash payments during a period. A cash flow statement is a statement which portrays the changes in cash position between two accounting periods. It helps in taking short term financial decisions and also in the preparation of cash budget for the next year.

How Cash Flow Differ From funds Flow ? Unlike funds flow Cash Flow does not has non-cash items. It comprises only those entries in which cash has come in or gone out.

449.36Cash From Operations 43.19Profit on sold Assets (Less) Non-cash Incomes 80.80Provisions 33.86Amortizations 12.52Interest Payable 35.15Depreciation (Add) Non-cash Expenses Net Profit Before Tax Statement Of Cash From Operations

Trade And Other Receivables Closing Cash Balance449.36Cash From Operations 12.52Interest Paid Long Term Borrowings Purchase Of Investments42.85Sale Of Investments 32.91Purchase Of Fixed Assets43.50Sale Of Fixed Assets 2.80Payments For Extraordinary Items Deposits Direct Taxes Paid Trade Payables Advances555.36Opening Cash Balance Outflow Of Cash Inflow Of Cash Cash Flow Statement