1. Presented by:
Ritesh Kumar Tiwari

2. Fund
 Fund means Working Capital.
Working Capital

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

5. 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
……..

6. Importance of Fund Flow Statement
 Identification & Analysis of changes in working capital
 Evaluation of firm’s financing
 Knowing the overall creditworthiness of a firm
 An instrument for allocation of resources

7. Statement of • Increase in Working Capital
Changes in
• Decrease in working Capital
Working Capital
Adjusted Profit
& Loss A/c
Fund Flow
Statement
• Funds from Operation (Profit)
• Funds lost in operation (Loss)
• Sources of Funds
• Application of Funds

8. Example:- The Balance Sheet of ABC Ltd. at the end of 2006 and 2007 are as
31 March 2007
31 March 2006
follows:
Liabilities:
Accounts Payable
15,000
20,000
Notes Payable
25,000
10,000
Other Current Liabilities
10,000
15,000
------
20,000
80,000
1,10,000
------
10,000
50,000
50,000
1,80,000
2,35,000
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
1,80,000
2,35,000
6 % Bonds
Retained Earning
Mortgage
Shares
TOTAL
Assets:
TOTAL

9. 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
Current Assets:
Decrease
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
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
-----
35,000
60,000
60,000
Current Liabilities:
Net Increase in Working Capital(Balance)
TOTAL

10. Adjusted Profit & Loss Account
Particular
To Depreciation
(55,000 – 40,000)
To Closing Balance of P & L
A/c
Amount
15,000
Particular
By Opening Balance of P & L
A/c
1,10,000 By Fund from Operation
(Balance)
1,25,000
Amount
80,000
45,000
1,25,000

11. 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

12. Thank You