Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

cash and fund flow

dhanashree (article) (97 Points)

14 August 2009

can plz anyone help me in undrstanding cash and fund flow????

i need to know the basic concepts for undrstanding the cash and fund flow.

plz help m out in it.

Reply
Follow
Share

5 Replies

Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14487 Points)
Replied 14 August 2009

What Does Cash Flow Mean?
1. A revenue or expense stream that changes a cash account over a given period. Cash inflows usually arise from one of three activities - financing, operations or investing - although this also occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This holds true for both business and personal finance.

2. An accounting statement called the "statement of cash flows", which shows the amount of cash generated and used by a company in a given period. It is calculated by adding noncash charges (such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project, or to a business as a whole. Cash flow can be used as an indication of a company's financial strength.

Investopedia explains Cash Flow
1. In business as in personal finance, cash flows are essential to solvency. They can be presented as a record of something that has happened in the past, such as the sale of a particular product, or forecasted into the future, representing what a business or a person expects to take in and to spend. Cash flow is crucial to an entity's survival. Having ample cash on hand will ensure that creditors, employees and others can be paid on time. If a business or person does not have enough cash to support its operations, it is said to be insolvent, and a likely candidate for bankruptcy should the insolvency continue.

2. The statement of a business's cash flows is often used by analysts to gauge financial performance. Companies with ample cash on hand are able to invest the cash back into the business in order to generate more cash and profit.

Upgrade to CAclubindia Pro. Subscribe Now!

Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14487 Points)
Replied 14 August 2009

Please see attachment

Attached File : 16 cash flow.xlsx downloaded: 272 times

Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14487 Points)
Replied 14 August 2009

What Does Fund Flow Mean?
The net of all cash inflows and outflows in and out of various financial assets. Fund flow is usually measured on a monthly or quarterly basis. The performance of an asset or fund is not taken into account, only share redemptions (outflows) and share purchases (inflows).

Net inflows create excess cash for managers to invest, which theoretically creates demand for securities such as stocks and bonds.

Investopedia explains Fund Flow
Investors and market analysts watch fund flows to gauge investor sentiment within specific asset classes, sectors, or for the market as a whole. For instance, if net fund flows for bonds funds during a given month is negative by a large amount, this would signal broad-based pessimism over the fixed-income markets.