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BRILLIANT’S Fund Flow Statement 87

Uses of Fund Flow Statement ’§$S> âbmo ñQ>oQ>‘|Q> Ho$ Cn¶moJ
Fund Flow Statement throws light on the ’§$S> âbmo ñQ>oQ>‘|Q> EH$ g§ñWm H$s ’$m¶Z|{e¶b ñQ´>oQ>oOr
financial strategy of a firm and guides financial na àH$me S>mbVo h¢ VWm CgH$s ì¶m»¶m ‘| ’$m¶Z|{e¶b
experts in the interpretation of the same. The E³gnQ²>©g H$m ‘mJ©Xe©Z H$aVo h¢& Bg ñQ>oQ>‘|Q> Ho$ ‘hÎdnyU©
important uses of this statement are as under: Cn¶moJ ZrMo {X¶o J¶o h¢…
 It helps management in operating and in-  ¶h ’§$S²>g Ho$ gmog}g VWm EpßbHo$eZ H$s nyU© gyMZm
vestment decision by providing a com- àXmZ H$aHo$ Am°naoqQ>J VWm B§doñQ>‘|Q> {ZU©¶ ‘| ‘¡ZoO‘|Q>
plete information of sources and applica-
H$s ghm¶Vm H$aVm h¡&
tion of funds.
 It provides a meaningful technique for eco-  ¶h BH$moZm°{‘H$ {díbofU Ho$ {bE EH$ AW©nyU© VH$ZrH$
nomic analysis. àXmZ H$aVm h¡&
 It highlights the relationship between the  ¶h d{Hª$J H¡${nQ>b VWm ZoQ> B§H$‘ Ho$ ~rM g§~§Y na
working capital and the net income. àH$me S>mbVm h¡&
 It guides experts by providing them with  ¶h ^{dî¶ H$s ’$m¶Z|{e¶b nm°{bgrO ‘| {deofkm| H$mo
information of future financial policies. gyMZm H$m ‘mJ©Xe©Z H$aVm h¡&
 It provides additional data for decision  ¶h {ZU©¶ H$aZo Ho$ {bE A{V[a³V S>mQ>m àXmZ H$aVm
making. h¡&

Limitations of Fund Flow Statement ’§$S> âbmo ñQ>oQ>‘|Q> H$s gr‘mE§
The main drawbacks of fund flow ’§$S> âbmo ñQ>oQ>‘|Q> H$s ‘w»¶ hm{Z¶m§ {ZåZ{b{IV h¢…
statement are as under:
 This statement cannot show the firm's cash  ¶h ñQ>oQ>‘|Q> g§ñWm H$s H¡$e CËnÝZ H$aZo H$s j‘Vm
generating capacity. àX{e©V Zht H$a gH$Vm h¡&
 The Accuracy of the statement is always  ñQ>oQ>‘|Q> H$s ewÕVm na h‘oem g§Xoh ahVm h¡&
doubtful.
 This statement shows inflows and out-  ¶h ñQ>oQ>‘|Q> g§nyU© ê$n go ’§$S> H$m BZâbmo VWm
flows of fund as a whole, but does not AmCQ>âbmo n«X{e©V H$aVm h¡ {H$ÝVw J{V{d{Y¶m| Ho$ {d{eï>
show net inflows or net outflows on the
àH$mam| Ho$ AmYma na ZoQ> BZâbmo ¶m AmCQ>âbmo àX{e©V
basis of specific types of activities. Hence
net flow from investing and financing ac- Zht H$aVm h¡& AV… B§dopñQ>¨J VWm ’$m¶Z|qgJ J{V{d{Y¶m|
tivities are not revealed clearly. go ZoQ> âbmo ñnï> ê$n go àH$Q> Zht hmoVo h¢& 

REVIEW QUESTIONS
Q.1. What are the limitations of fund flow statement?
’§$S> âbmo ñQ>oQ>‘|Q> H$s gr‘mE§ ³¶m h¢? [See Q.10]
Q.2. What do you mean by fund flow statement?
’§$S> âbmo ñQ>oQ>‘|Q> go AmnH$m ³¶m Ame¶ h¡? [See Q.8]
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