Relatioship/Similarities of Cash Flow and Fund Flow:

 Both Cash Flow and Fund Flow explains the causes of changes occurred.
Although, Cash Flow explains the reasons for changes in cash position
where as Fund Flow explains the causes of chnages in financial position.

 Both help in proper allocation of resources.

 Cash Flow and Fund Flow both acts as a future guide.

 Cash Flow as well as Fund Flow based on Secondary data i.e. Income
Statement and Position Statement (Balance Sheet).

 Both the statement is historical in nature because it is prepared on the

basis of Historical financial statements.

 Both statements provide necessary informations to the users.

 Both statements help the management in future planning and decision

making.

 It is a comparative analytical statement between two consecutive periods.

 Helps in preparation of budget for the next period. (Cash budget; Capital
Budget)

Q. Net Increase/ Decrease in Working Capital source or Application of funds:

If a company's owners invest additional cash in the company, the cash will increase
the company's current assets with no increase in current liabilities. Therefore
working capital will increase. (Application of funds)

If a company borrows $50,000 and agrees to repay the loan in 90 days, the
company's working capital is unchanged. The reason is that the current asset Cash
increased by $50,000 and the current liability Loans Payable increased by $50,000.
(Sources of Funds)
Q. How Three Financial Statements liked Together?

 Net income from the income statement flows to the balance sheet and cash flow
statement
 Depreciation is added back and CapEx is deducted on the cash flow statement,
which determines PP&E on the balance sheet
 Financing activities mostly affect the balance sheet and cash from finalizing, except
for interest, which is shown on the income statement
 The sum of the last period’s closing cash balance plus this periods cash from
operations, investing, and financing is the closing cash balance on the balance sheet

NET INCREASE IN WORKING CAPITAL:

It means that it can generate revenue without increasing current liabilities. ... If
the current assets and current liabilities have increased by the same amount,
there would be no change in net working capital. If the change is positive, then
the change in current liabilities has increased more than the current assets.