GROUP MEMBERS

VARSHA-85 KHUSHBU-113 KARISHMA-115 SHITAL-126 ANKITA-133 KHUSHBOO-152

INTRODUCTION
Fund

flow statement summarize firms inflow and outflow of fund. The statement is used to determine whether company is efficiently sourced and utilize funds available to them. It can also be used to identify any problem in way company operates.

SIGNIFICANCE OF FUND FLOW STATEMENT

The

outsiders can decide whether or not to invest in the enterprise and on what terms funds have to be invested. the help of the FFS the analyst can evaluate the financing pattern of the enterprise. statement is also meaningful in judging whether the company has grown at too fast a rate and whether financing is strained.

With

The

WORKING CAPITAL
According to working capital concept, the term funds refers to net working capital (current assets current liabilities). In the fund statement, inflow and outflow of net working capital is displayed.
In this we split balance sheet in fixed and floating parts. Fixed area consist of fixed assets and long term liabilities, where as floating area consist of current assets and current liabilities.

An increase in current assets would results in a rise in net working capital but decrease in it causes reduction in the level of net working capital. On the other hand, net working capital decline with increase in current liabilities and rise with decrease in it. The prime objective of the fund flow statement is prepared on the basis of net working capital. In the 1st statement changes in net working capital are recorded- schedule of working capital. The 2nd statement is fund flow statement.

FUND FLOW STATEMENT HAS 2 SIDES

Sources of Funds Issue of Shares Application of funds Redemption of Shares

Issue of Debentures
Fixed Assets Sold Investment Sold

Redemption of Deb
Fixed Asset Purchase Investment Purchase

Loan taken
Decrease in W.Cap

Loan Repaid
Increase in W.Cap

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