CASH FLOW STATEMENT

BY – SIDDHANT AGGARWAL
 Meaning
 Cash: Cash means all cash + cash equitable
+ marketable securities + bank balance
 Flow : flow means flow of cash from business to economy
and economy to business i.e. cash inflows and cash
outflows.
 Statement : Statement is a Performa prescribes by charted
accountant act,1948 .
THUS,
Cash flow statement is a statement of inflows and
outflows of cash and cash equivilants in an enterprise
during a specific period of time
 Continued…..
A cash flow statement summarizes the cause of change
in cash position of business enterprise between date of
two balance sheet,

A statement a cash flow reveals the movements of cash

of a business enterprise for the given accounting period
indicating specifically how the cash was generated.

Statement of cash flow is required for a short range

financial planning
 Classification
As per accounting standard-3 (revised) the change resulting in
cash inflows and outflows arise on account of three types of
activities.

 Cash flow from OPERATING ACTIVITIES

 Cash flow from INVESTING ACTIVITIES
 Cash flow from FINANCING ACTIVITES
 MERITS OF CASH FLOW
STATEMENT
 Cash Flow Statements help in knowing the liquidity / actual
cash position of the company which funds flow and P&L are
unable to specify.
 The financial plan and policies are prepared with the help of
detailed information of cash flow analysis in the years to
come.
 The banks and financial institutions can decide before lending
loan facilities on seeing the cash flow statement.
 The projected cash flow statement helps the management
to,prepare cash budget.
 Continued…..
 The company can make an arrangement of future cash
requirements on the basis of projected cash flow statement.
 Some factors are responsible for variations of cash. Such
factors can be observed with the help of cash flow analysis.
 It reflects good or bad management of the business.