A PROJECT REPORT

ON

CASH FLOW STATEMENT

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2 INTRODUCTION Cash flow statement is a statement which shows the sources of cash inflow and uses of cash out-flow of the business concern during a particular period of time. “cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.”

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• To provide information about the cash inflows and cash outflows from operating, financing and investing activities of the firm.

• To show the impact of the operating, financing and investing activities on cash resources.

• To explain the causes for changes in cash balance.• To identify the financial needs and help in

forecasting future cash flows.

Objectives Of Study

4 Importance of Study This Project will help company to find it’s

weakness and strength, and also the areas where they can improve.

It will help company to decide the future direction of the company.

It will help company in improve its financial position.

It gave me opportunity to apply theoretical knowledge obtained from college in a practical manner in the actual business environment.

5 LIMITATIONS OF STUDYCash flow statement cannot replace the income

statement or the fund flow statement. Each of them has a separate functions to perform.

Being a vast topic it is not possible to cover all the matters and aspects related to analyzing of financial statements.

Cash flow statement cannot be equated with the income statement.

The data undertaken is of last two years , therefore we fail to get the whole financial history of the organization.

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Theoretical background

7 Scope of Cash Flows Statement1. Cash flow is a financial statement that presents

information about the company's.2. The general form of the cash flow statement shows three

categories, namely: cash flow from operating activities, cash flows from investing activities & cash flows from financing activities.

3. Operating activities are the principal revenue-producing activities of the company and other activities that are not investing activities and financing activities.

4. Investment activity is the acquisition and disposal of long-term assets and other investments that do not include cash equivalents.

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Importance of cash flow1.The statement cash flow is based upon, to get

the information about the cash receipts and the cash payment during a period.

2.The preparation of cash flow statement is very much useful to management.

3. It is one of the three main financial statement a) Balance sheet.b) Income statement c) Cash flow statement.

9 Needs of cash flow Statement1) Knowledge Of Magnitude : -

The cash flow statements provide us information regarding cash generated and used in operating, investing and financing activities.

2) Tool Of Planning : - Cash flow statement is used as the basis for projection of future investment and financing plans of enterprise by management.

3) Tool Of Historical Analysis :-The financial decision taken in the past can be

evaluated on the basis of information supplied by cash flow statement.

 

10 TYPES OF CASH FLOW

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Types of Cash Flow Activities

1. Operating activities:- Involve the cash effects of transactions that enter into the determination of net income.

2. Investing activities:- Concern with buying and selling property, plant and equipment.

3. Financing activities: - Include issuance and reacquisition of a firm's debt and capital stock, and dividend

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From sale of goods and services to customers.

Payment of employeebenefit expenses.

Receipt from royalties, fees, commission and other revenues.

Pay operating expenses.

Payment of taxes.

OperatingActivities

Sale of property, plant,Equipment, long-terminvestments.

Receipt from Interestand dividends.

Investing Activities

Purchase of property,plant, equipment andnon-current investments.

Proceeds from issue ofpreference or equity shares.

Proceeds from Issuance ofDebts/Bonds.

Redemption of preference shares, buy back of equity shares.

Payment of dividends and interest.

Procurement of loans.

FinancingActivities

Classification of Cash inflows and Cash Outflows Activities:-

13 Research Methodology

Method of Data Collection

1. Primary Data Collection:- 2. Secondary Data

Collection:-

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Bibliography1. Financial Management – By Dr. R M Shrivastava, Pragti Publication Meerut.

2. Financial Management Principal and Practice – By G Sudharasana Reddy.

3. Principal of Management – By Poonam Gandhi

4. Website:- WWW.GOOGLINK.COM

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THANK YOU