Page 68 - Corporate Finance PDF Final new link

NPP

2.1

CONCEPT OF FUND FLOW ANALYSIS / ’§$S> âbmo EZm{b{gg H$s AdYmaUm

Q.8. What do you mean by Fund Flow analysis? Explain the concept of Fund Flow.
’§$S> âbmo EZm{b{gg go AmnH$m ³¶m Ame¶ h¡? ’§$S> âbmo H$s AdYmaUm g‘PmB¶o&
OR
Write a short note on Fund Flow statement. / g§{jßV {Q>ßnUr {b{IE… ’§$S> âbmo ñQ>oQ>‘|Q>&

Introduction n[aM¶
In accounting, three major financial AH$mC§qQ>J ‘| E³¶y‘wboQ>oS> ’$m¶Z|{e¶b S>mQ>m go àm¶…
statements are usually prepared from the VrZ à‘wI ’$m¶Z|{e¶b ñQ>oQ>‘|Q²>g V¡¶ma {H$¶o OmVo h¢…
accumulated financial data:
 The Balance Sheet  ~¡b|g erQ>
 The Profit & Loss/ income statement  àm°{’$Q> E§S> bm°g/B§H$‘ ñQ>oQ>‘|Q>
 The statement of changes is financial posi-  n[adV©Z H$m ñQ>oQ>‘|Q> ’$m¶Z|{e¶b nmo[OeZ h¡&
tion.
The balance sheet shows the financial ~¡b|g erQ> AH$mC§qQ>J nr[a¶S> Ho$ A§{V‘ {XZ H$r
position of a firm as on the last day of the g§ñWm H$s ’$m¶Z|{e¶b nmo[OeZ Xem©Vr h¡&
accounting period.
The income statement shows the results B§H$‘ ñQ>oQ>‘|Q> EH$ {X¶o J¶o AH$mC§qQ>J nr[a¶S> Ho$
of operation for a company during a given Xm¡amZ EH$ H§$nZr Ho$ H$m¶© H$m n[aUm‘ àX{e©V H$aVm h¡&
accounting period.
Apart from the income statement and the B§H$‘ ñQ>oQ>‘|Q> VWm ~¡b|g erQ> Ho$ A{V[a³V Vrgam
balance sheet, the third statement is the ñQ>oQ>‘|Q> ’$m¶Z|{e¶b nmo[OeZ ‘| n[adV©Z H$m ñQ>oQ>‘|Q> h¡
statement of changes in financial position also
known as the fund flow statement. This {Ogo ’§$S> âbmo ñQ>oQ>‘|Q> ^r H$hm OmVm h¡& ¶h ñQ>oQ>‘|Q>
statement measures, the changes that have n[adV©Zm| H$m ‘mnZ H$aVm h¡ Omo Xmo ~¡b|g erQ> {XZm§H$m| Ho$
taken place in the financial position of a firm ~rM EH$ g§ñWm H$s nmo[OeZ ‘| hþAm h¡& ¶h Xem©Vm h¡
between two balance sheet dates. It shows
sources of the financial resources (funds) and {H$ ’$m¶Z|{e¶b [agmog}g (’§$S²>g) H$hm§ go Am¶o VWm H$hm§
where they are invested/expended. J¶o h¢&
However, the statement of changes in ¶Ú{n ’$m¶Z|{e¶b nmo[OeZ ¶m ’§$S²>g âbmo ñQ>oQ>‘|Q>
financial position or funds flow statement ‘| n[adV©Zm| H$m ñQ>oQ>‘|Q> {d{^ÝZ H§$nZrO Ûmam V¡¶ma {H$¶m
prepared by different companies varied greatly
in content because of the different OmVm h¡ Cg n[aàoú¶ ‘| ~hþV AbJ hmoVm h¡ ³¶m|{H$ '’§$S²>g'
interpretations of the term 'funds'. eãX H$s {d{^ÝZ ì¶m»¶mE§ hmoVr h¢&

[68]