Presentation topic: fund flow and cash flow

statement

Presented by:
Satya prakash
 Introduction
“Funds Flow Statement” or “Statement of
Changes in Financial Position” or a
“Statement of Sources and Uses of Fund”
shows for a particular period of time the
sources from which funds were obtained
by an MFI and the specific uses to which
such funds were applied.
 Introduction-Contd.

 It reports: the movement of funds between

various assets and liabilities during an
accounting period.
 The following information are required to
prepare a Funds Flow Statement:
 Balance Sheets of the Current Year and
preceding Accounting Year,
 Required Information-Contd.

 Profit and Loss Account of the current

Accounting Year and
 Related Notes on Accounts, Schedules
and Appendices.
 Objectives
 To show the sources of financial resources
 To show the uses of financial resources,
 To provide information on all financing and
investment activities of an MFI,
 Objectives-Contd.

 To show whether the financial resources

are properly applied or used by an MFI.
 To disclose the amount and causes of
change in financial position.
 Balance Sheet

 The balance sheet provides a listing of all

the assets, liabilities and capital of an MFI
at a given point in time.

 As such, it is a “snapshot” of the sources

of funds (liabilities and capital) and how
these funds have been applied (as
assets).
 This can be illustrated as below

The design of the balance sheet is based

on the “accounting equation” that states:
Liabilities and capital = Assets
Liabilities &Capital Assets
SHARES CASH
SURPLUS LOANS
DEPOSITS INVESTMENTS
SAVINGS FIXED ASSETS
 Liabilities & Capital

The Liability and capital side of the

balance sheet usually comprises three
categories of items:
 Member capital (or equity ):
 Long term Liabilities:
 Current Liabilities:
 Assets

The Liability and capital side of the

balance sheet usually comprises three
categories of items:
 Cash:

 Investments:

 Loans:

 Fixed Assets:
 Cash Flow Summary
 This statement is a simple summary of cash inflows and
outflows over a given period of time.

 Cash flow is prepared on a monthly basis in savings and

credit cooperatives.

 Cash inflow consists of savings, deposits, shares, loan

repayments, service fees, interest received, fines etc.
 Contd…
 Cash outflow consists of shares
withdrawn, savings withdrawn, deposits
withdrawn, loans issued, equipment
purchased, expenses paid etc.

 Cash flow is the difference between the

cash flowing in and the cash flowing out of
the Cooperative.
The Income and Expenditure Statement

The income and expenditure statement is

a summary of the income and expenses of
the cooperative for a period of time.

This is also called as profit and loss

statement. Usually this is prepared
monthly or annually. The accounting
equation can be expanded to include the
components of income and expenses.
 Contd…

The accounting equation can be expanded to

include the components of income and
expenses.
Assets = Liabilities + Capital + Income – Expenses

The income and expenses statement lists all the

expenses incurred by the cooperative during the given
period of time and all the income earned. The statement
also shows the excess of income over expenditure which
is called as surplus or profit.
The income and expenditure can be
grouped under the following heads:
Income: Expenses:

-Interest on Loans -Cost of funds

-service fee -personnel costs

-membership fees -facility costs

-interest on investments -operational costs

-Other income -governing costs