Fund flow management

Finance

A fund flow statement may be a summary of a firm's inflow and outflow of funds It tells us from where funds have come and where funds have gone. The budget of the business indicate assets, liabilities and capital on a specific date and also the profit or loss during a period. But it's possible that there's enough profit within the business and therefore the financial position is additionally good and still there could also be deficiency of money or of working capital in business. If the management wants to seek out out on where the cash is being utilized, budget cannot help. Therefore,a statement is ready of the sources and applications of funds from where capital comes and where it's utilized. This is called Fund Flow statement. Funds Flow Statement is an analytical tool within the hands of monetary manager. The basic purpose of this statement is to point on historical basis the changes within the capital i.e., where funds came from and where they're used during a given period The funds flow statement or statement of changes in financial position may be a statement of flows, it measures the changes that have taken place during two balance sheet dates. According to R.N. Anthony, ???Fund Flow may be a statement prepared to point the rise in cash resources and therefore the utilization of such resources of a business during the accounting period.???

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