fund flow & cash flow

7/30/2019 Fund flow & cash flow

1/17

[email protected]

STATEMENT SHOWING CHANGES IN FINANACIAL POSITION


2/17

INFLOW- SOURCES OF FUNDS

OUTFLOW- APPLICATION OF FUNDS


3/17


4/17


5/17

Requirements:

1.Balance sheets of the current &previous years2.Adjustments which are to be incorporated.

Classification of' Assets & liabilities

Preparation of schedules

1.schedule of changes in working capital.to find increase/decrease in working capital

2.Adjusted profit &loss account.

to find Funds from operationsorloss in operations

3. Ledger accounts..to findi)Application of funds,ii)Sources of funds

iii)Transfer of accounts


6/17

ASSETS

1.Current assets:

Stock,debtors,B/R,short -term investments,cash.

2.Non-current assets:

Fixed assets,long terminvestments.

3.Intangible assets:

Goodwill,Patents etc.,

4.Fictious assets:P/L a/c,preliminary exp.,Discount on shares etc.

LIABILITIES

1.Current liabilities:

Creditors,banko/d,B/R, short termloans etc.,

2.Non-current liabilities:

Share capital,Reserves&surplus,Provision etc.,

3.Long term liabilities


7/17

PREPARE THE SCHEDULE WITH FOLLOWING RULE:

INCREASE IN CURRENT ASSETS& DECREASE INCURRENT LIABILITIES

Increases the working capital

DECREASE IN CURRENT ASSESTS&

INCREASE IN CURRENT LIABILITIESDecreases the working capital


8/17


9/17

To Opening balance By Bank-sale (S)

To Bank-purchases (A) By Adj.P/L a/c-depreciationTOAdj.P/L a/c-profit onsale By Adj.P/L a/c-loss on sale

-------- --------

To Bank-payment(A) By Opening balance

To Closing balance By Adj.P/L a/c-transfer(T)

By Barrowings(S)

---------- -------

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ASSETS A/C

LIABILITIES A/C

BALANCE IN ACCOUNTS Would be sale or purchase or transfer


10/17

To Depreciation- fixed asset a/c

To Loss on sale of fixed assetTo Goodwill written off

To Preliminary expenses

To General reserve

To Dividend paid

To Provision for taxation

To BALANCE c/f---------

---------

By BALANCE b/d

By Profit on sale of fixed assetsBy Dividend,Interestre ceived etc.

By Profit on redemption of shares&debentures

By FUNDS FROM OPERATIONS **-----------

------------

-------------------

**Balancing figure


11/17

CALCULATION OF CASH FROM OPERATIONS

ADJUSTMENTS TO CONVERT FROM ACCRUAL BASIS TO CASH BASIS

FUNDS FROM OPERATIONS-(Adj.P/L a/c ) *****

Working capital changes requiring cash or

Not providing cash:INCREASE IN CURRENT ASSETS &DEREASE IN CURRENT LIABILITIES *****

--------

Working capital changes providing cashOr not requiring cash

DECREASE IN CURRENT ASSETS &

INCREASE IN CURRENT LIABILITIES *****---------*****

*****


12/17


13/17

SOURCES FUNDS FROM OPERATION

ISSUE OF SHARES

ISSUE OF DEBENTURES

LONG TERM LOANS

SALE OF FIXED ASSETS &OTHERINVESTMENTS

NON TRADING RECEIPTS

APPLICATION PUCHASE OF FIXED ASSETS

&INVESTMENTS

REDEMPTION OF PREFERENCE

SHARES &DEBENTURES

REPAYMENT OF LONG TERM LOANS PAYMENT OF DIVIDENTS

PAYMENT OF TAXES

LOSS FROM OPERATIONSDECREASE IN WORKING CAPITAL

INCREASE IN ORKINGCAPICAPITAL

If the sources exceeds application, it increases working capital

And vice versa


14/17


15/17

DERIVATION OF CASH

OPERATING PROFIT

ISSUE OF SHARES

RENT,INTEREST&DIVIDEND RECEIVED

DECREASE IN Current

ASSET EXCEPT CASH

INCREASE IN ANYCurrent LIABILITY

Decrease in Cashbalance

DISPOSITION OF CASH

OPERATING LOSS

REDEPTION OF SAHRES&DEBENTURES

CASH DIVIDEND PAID INCREASE IN Current ASSET

EXCEPT CASH

DECREASE IN ANY Current

LIABILITY Increase in Cash balance

## difference in CASH BALNACE


16/17

INFLOW OF CASH

Cash from operations

Issue of shares &debentures

Barrowing of L.T. Loans

Sale of fixed assets&investments

Non-trading receipts e.g.

dividend,rent, etc.

DECREASE IN CASH BALANCE

OUTFLOW OF CASH

Loss from operations

Purchase of shares &

debentures

Repayment of LT loans Purchase of fixed assets

&investments

Payment of dividends &

taxes INCREASE IN CASH BALANCE


17/17

INFLOW OF CASH Cash from operations

Issue of shares &debentures

Long term loans &sale of fixed assets,investments

Non trading receipts

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Outflow of cash Loss from operations

Redemption of shares & debentures

Repayment of L.T. loans &purchase of fixed assets

Payment dividend &taxes

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INCREASE/ DECREASE IN CASH BALANCE

Instead of showing increase or decrease in cash balance the statement may start with

Opening balance of cash & reach closing balance of cash through inflows &outflows

fund flow & cash flow

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