Cash Flow and Fundflow
This query is : Resolved
30 October 2008
What is the difference between fund flow and cash flow
30 October 2008
While cash flow represents flow of actual cash, fund flow represents movement of liabilities and assets as well.
30 October 2008
Thank you Mr. Srinivasaraghavan
30 October 2008
FUNDS: It refers to the working capital of a business
CASH FLOW STATEMENTS
A cash flow statement shows changes in cash position from one period to another. The term cash refers to both cash and bank balances. The change in cash position from one period to another is computed by taking into account of sources and application of cash.
PREPARATION OF CASH FLOW STATEMENTS
Opening balances
Cash Balance xxx
Bank Balance xxx
XXX
ADD
SOURCES OF FUNDS
Issue of shares xxx
Raising long term loans xxx
Sale of fixed assets xxx
Short-term borrowings xxx
Cash from operations xxx
TOTAL CASH AVAILABLE XXX
LESS
APPLICATION OF FUNDS
Redemption of redeemable preference shares xxx
Redemption of long term loans xxx
Purchase of fixed assets xxx
Decrease in deferred payment liabilities xxx
Cash out flow on account of operation xxx
Tax paid xxx
Dividend paid xxx
Decrease in unsecured loans and deposits etc xxx
TOTAL APPLICATIONS XXX
Closing Balances
Cash Balance
Bank Balance XXX
FUND FLOW STATEMENTS
The term flow means change and therefore the flow of funds means change in funds or change in working capital. In other words any increase or decrease in working capital means Flow of Funds.
PREPARATION OF FUND FLOW STATEMENTS
SOURCES OF FUNDS
Issue of shares xxx
Issue of debentures xxx
Long term borrowings xxx
Sale of fixed assets xxx
Operating profits xxx
Total sources XXX
APPLICATION OF FUNDS
Redemption of redeemable preference shares xxx
Redemption of debentures xxx
Payment of other long term loans xxx
Purchase of fixed assets xxx
Operating loss xxx
Payment of dividends, tax etc xxx
Total uses XXX
Net increase/decrease in working capital (Total sources – total uses)
Note while preparing funds flow statements, current assets and current liabilities are to be ignored. Attention is to be given to changes in fixed assets and fixed liabilities.
The difference between cash flow and funds flow is cash flow analysis is concerned only with the changes in cash position while a fund flow analysis is concerned with changes in working capital.
CASH FLOW STATEMENTS
A cash flow statement shows changes in cash position from one period to another. The term cash refers to both cash and bank balances. The change in cash position from one period to another is computed by taking into account of sources and application of cash.
PREPARATION OF CASH FLOW STATEMENTS
Opening balances
Cash Balance xxx
Bank Balance xxx
XXX
ADD
SOURCES OF FUNDS
Issue of shares xxx
Raising long term loans xxx
Sale of fixed assets xxx
Short-term borrowings xxx
Cash from operations xxx
TOTAL CASH AVAILABLE XXX
LESS
APPLICATION OF FUNDS
Redemption of redeemable preference shares xxx
Redemption of long term loans xxx
Purchase of fixed assets xxx
Decrease in deferred payment liabilities xxx
Cash out flow on account of operation xxx
Tax paid xxx
Dividend paid xxx
Decrease in unsecured loans and deposits etc xxx
TOTAL APPLICATIONS XXX
Closing Balances
Cash Balance
Bank Balance XXX
FUND FLOW STATEMENTS
The term flow means change and therefore the flow of funds means change in funds or change in working capital. In other words any increase or decrease in working capital means Flow of Funds.
PREPARATION OF FUND FLOW STATEMENTS
SOURCES OF FUNDS
Issue of shares xxx
Issue of debentures xxx
Long term borrowings xxx
Sale of fixed assets xxx
Operating profits xxx
Total sources XXX
APPLICATION OF FUNDS
Redemption of redeemable preference shares xxx
Redemption of debentures xxx
Payment of other long term loans xxx
Purchase of fixed assets xxx
Operating loss xxx
Payment of dividends, tax etc xxx
Total uses XXX
Net increase/decrease in working capital (Total sources – total uses)
Note while preparing funds flow statements, current assets and current liabilities are to be ignored. Attention is to be given to changes in fixed assets and fixed liabilities.
The difference between cash flow and funds flow is cash flow analysis is concerned only with the changes in cash position while a fund flow analysis is concerned with changes in working capital.
30 October 2008
Thx very much for the detail explanation, is there any PPT on this so that i can go through it.
31 October 2008
Not to my knowledge. But The books on management accounting like Brown & Howard explain it well.
31 October 2008
Thx, is there Indian author there for this
31 October 2008
'Management Accounting' by M Y Khan & P K Jain. Publishers : Tata McGraw Hill.
'Management Accounting : Text & Cases’ by Robert N. Anthony & James S. Recce.
‘Management Accounting’ by I M Pandey Publishers : Vikas Publishing House Pvt. Ltd.
'Management Accounting : Text & Cases’ by Robert N. Anthony & James S. Recce.
‘Management Accounting’ by I M Pandey Publishers : Vikas Publishing House Pvt. Ltd.
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