Presented by:

Ritesh Kumar Tiwari

Fund
Fund means Working Capital.

Working Capital
Fund Flow Statement
Fund flow statement is
a statement shows the changes in funds
b/w two balance sheet of two different dates.


Format of Fund Flow Statement
Fund Flow Statement
(As on..)

Sources of Funds Amount Application of Funds Amount
Issue of share capital . Redemption of pref. share ..
Issue of debenture . Redemption of debenture ..
Raising of long term loan . Payment of long term loan ..
Sales of fixed assets . Purchase of fixed assets ..
Interest received . Interest paid ..
Dividend received . Dividend paid ..
Refund of Taxes . Payment of Taxes ..
Decrease in working capital . Increase in working capital ..
Fund from operation . Fund lost in operation ..
TOTAL .. TOTAL ..
I mportance of Fund Flow Statement
Identification & Analysis of changes in working capital
Evaluation of firms financing
Knowing the overall creditworthiness of a firm
An instrument for allocation of resources
Increase in Working Capital
Decrease in working Capital
Statement of
Changes in
Working Capital
Funds from Operation (Profit)
Funds lost in operation (Loss)
Adjusted Profit
& Loss A/c
Sources of Funds
Application of Funds
Fund Flow
Statement
Example:- The Balance Sheet of ABC Ltd. at the end of 2006 and 2007 are as
follows: 31 March 2006 31 March 2007
Liabilities:
Accounts Payable 15,000 20,000
Notes Payable 25,000 10,000
Other Current Liabilities 10,000 15,000
6 % Bonds ------ 20,000
Retained Earning 80,000 1,10,000
Mortgage ------ 10,000
Shares 50,000 50,000
TOTAL 1,80,000 2,35,000
Assets:
Cash 10,000 5,000
Marketable Security 10,000 -------
Inventory 70,000 1,05,000
Receivables 30,000 40,000
Fixed Assets 1,00,000 1,40,000
Accumulated Depreciation (-)40,000 (-)55,000
TOTAL 1,80,000 2,35,000
You are required to prepare a Statement of Changes in Working Capital and
Fund Flow Statement.
Statement of Changes in Working Capital
Particular 2006 2007
Effect on Working Capital
Increase Decrease
Current Assets: Rs. Rs. Rs. Rs.
Cash 10,000 5,000 ----- 5,000
Marketable Security 10,000 ----- ----- 10,000
Inventory 70,000 1,05,000 35,000 -----
Receivable 30,000 40,000 10,000 -----
1,20,000 1,50,000
Current Liabilities:
Accounts Payable 15,000 20,000 ----- 5,000
Notes Payable 25,000 10,000 15,000 -----
Other Current Liabilities 10,000 15,000 ----- 5,000
50,000 45,000
Net Increase in Working Capital(Balance) ----- 35,000
TOTAL 60,000 60,000
Adjusted Profit & Loss Account
Particular Amount Particular Amount
To Depreciation
(55,000 40,000)
15,000 By Opening Balance of P & L
A/c
80,000
To Closing Balance of P & L
A/c
1,10,000 By Fund from Operation
(Balance)
45,000
1,25,000 1,25,000
Fund Flow Statement
( As on 31 march 2007)
Sources Amount Application Amount
Mortgage 10,000 Purchase of Fixed Assets 40,000
6 % Bonds 20,000 Net Increase in Working
Capital
35,000
Funds from Operation 45,000
75,000 75,000
Thank You