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Funds Flow Statements Process

This document outlines the process for creating a fund flow statement. It discusses three key steps: 1) Creating a schedule of changes in working capital by tracking increases and decreases in current assets and current liabilities. 2) Calculating funds from operations by adjusting net profits for non-cash items. 3) Developing the fund flow statement to show sources and applications of funds. The statement balances sources of funds with their applications.

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Nancy Verma
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333 views

Funds Flow Statements Process

This document outlines the process for creating a fund flow statement. It discusses three key steps: 1) Creating a schedule of changes in working capital by tracking increases and decreases in current assets and current liabilities. 2) Calculating funds from operations by adjusting net profits for non-cash items. 3) Developing the fund flow statement to show sources and applications of funds. The statement balances sources of funds with their applications.

Uploaded by

Nancy Verma
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Funds Flow Statements Process

Nancy Verma 033 MBA(IITM)

Fund flow statement


Funds refers to working capital of a business. A statement summarizing inflows and outflows of funds from any business activity is known as fund flow statements.

Procedure of Fund flow statement


It includes 3 steps which are as follows:1) Schedule in changes in working capital. 2) Funds from operations. 3) Funds flow statement.

Schedule of changes in working capital


Rules for preparing the schedule:1) Increase in current assets results in increase in working capital. 2) Decrease in current assets results in decrease in working capital. 3) Increase in current liabilities results in decrease in working capital. 4) Decrease in current liabilities results in increase in working capital.

Items

Previous year

Current year

Increase Decrease in working in working capital capital

A. Current assets: Cash at bank Cash in hand Stock Debtor Bills receivables Prepaid expenses Total(a) B. Current liabilities: Short term loans Bank overdraft Creditors Bills payable Outstanding expenses Total(b) Net working capital(a-b) Increase/decrease in working capital

Funds from operations

Closing balance of P&L account or retained earnings ADD: Depreciation Amortization of intangible assets Appropriation of retained earnings Loss on sale of fixed assets Dividends paid Provision for tax(if taken as non current liabilities) LESS: Profit from sale of fixed assets Appreciation in value of fixed assets Dividend received Excess provision transferred to P&L Opening balance of P&L account

XXX
XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Funds flow statement

Sources of funds Funds from operation Issue of shares Issue of debentures Long-term borrowings Sale of fixed assets Decrease in working capital

Amount Applications of funds xxx xxx xxx xxx xxx xxx Loss from operation Redemption of preference shares Redemption of debentures Repayment of long term loans Purchase of fixed assests Payment of dividend and taxes Increase in working capital

Amount xxx

xxx xxx
xxx xxx xxx xxx xxx

xxx

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