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                                                                                      2.2





                                CONCEPT OR OVERVIEW OF CASH FLOW STATEMENT
                                        H¡$e âbmo ñQ>oQ>_|Q> H$s AdYmaUm `m AdbmoH$Z

                   Q.11. What is cash flow statement? Explain its concept in brief.
                         H¡$e âbmo ñQ>oQ>_|Q> Š`m h¡? BgH$s AdYmaUm H$m g§{jßV ‘| dU©Z H$s{OE&
                                                           OR
                         What do you understand by cash flow statement? Distinguish between funds flow and
                         cash flow statement.
                         H¡$e âbmo ñQ>oQ>_|Q> go Amn Š`m g_PVo h¢? \§$S²>g âbmo VWm H¡$e âbmo ñQ>oQ>_|Q> Ho$ ~rM A§Va ~VmB`o&

                  Introduction                                n[aM¶
                      These are two basic financial statements    Xmo ~o{gH$ \$m`ZopÝe`c ñQ>oQ>_|Q> hmoVo h¢: ~¡coÝg
                  i.e.  the  balance  sheet  and  profit  and  loss  erQ> d àm°{\$Q> EÊS> bm°g AH$mC§Q>Ÿ& `o {~OZog H$s
                  account.  These  provide  the  essential  basic  \$m`ZopÝe`b EpŠQ>{dQ>r Ho$ g§~§Y _| Amdí`H$ OmZH$mar
                  information about the financial activities of a
                  business.  But  their  utility  is  limited  for  àXmZ H$aVo h¢Ÿ& {H$ÝVw EZm{b{gg Ed§ ßbmqZJ H$s Ñ{ï>
                  analysis and planning purpose. This is why,  go CZH$s Cn`mo{JVm gr{_V hmoVr h¡Ÿ& Bg{cE, \§$S²>g
                  funds  flow  statement  is  prepared  which  âbmo ñQ>oQ>_|Q> ~Zm`m OmVm h¡ Omo d{Hª$J H¡${nQ>b Ho$
                  presents comprehensive picture of the various
                  components  of  working  capital  along  with  {d{^ÝZ Ad`dm| Ho$ gmW CZ_| n[adV©Zm| H$m ì`mnH$ {MÌ
                  the causes of change in working capital. But  àñVwV H$aVm h¡&  {H$ÝVw \§$S> âcmo ñQ>oQ>_§oQ>, H¡$e Ho$
                  the funds flow statement fails to convey the  BZâcmo Am¡a AmCQ>âcmo H$s _mÌm H$mo àX{e©V Zht H$a
                  quantum  of  inflow  and  outflow  of  cash.  nmVo h¢Ÿ& Bg{cE, \§$S> âcmo ñQ>oQ>_|Q> H$s Vah EH$ AÝ`
                  Therefore, another statement like funds flow
                  statement  is  prepared  which  is  known  as  ñQ>oQ>_|Q> V¡`ma {H$`m OmVm h¡ {Ogo "H¡$e-âcmo ñQ>oQ>_|Q>'
                  'Cash Flow Statement'.                      H$hm OmVm h¡Ÿ&
                      Cash flow  statement is  the summarized     H¡$e  âbmo  ñQ>oQ>_|Q>  EH$  _hÎdnyU©  ñQ>oQ>_|Q>  h¡  Omo
                  form of inflow of cash from different sources  {~OZog Ho$ H¡$e Ho$ {d{^ÝZ òmoVm| Ed§ CZHo$ à`moJ H$s
                  and  the  uses  to  which  the  cash  has  been  EZm{b{gg H$aVm h¡Ÿ& JwS²>g Ed§ E³ñnoÝgog Ho$ H«o${S>Q>g©
                  applied. Cash flow statement is useful for the  H$s Va\$ {~OZog H$s AënH$mcrZ dMZ~ÕVm H$mo nyam
                  management  in  assessing  the  capability  of
                                                              H$aZo H$s BgH$s úm_Vm H$mo {ZYm©[aV H$aZo _| H¡$e âbmo
                  business to meet its short-term commitments
                  towards  creditors  for  goods  and  expenses.  ñQ>oQ>_|Q> _¡ZoO_|Q> Ho$ {cE Cn`moJr h¡Ÿ& H¡$e âbmo ñQ>oQ>_|Q>,
                  Cash  flow  statement  indicates  different  {d{^Þ òmoVm| Ed§ H¡$e Am¡a H¡$e BpŠddob|Q> Ho$ Cn`moJm|
                  sources and uses of cash and cash equivalents.  H$mo Xem©Vm h¡Ÿ& \§$S²>g âbmo ñQ>oQ>_|Q> Ûmam ^r g_mZ CÔoí`
                  Similar purpose is also  served by fund flow  H$s ny{V© H$s OmVr h¡Ÿ& hmcm§{H$, hmc hr Ho$ dfm] _| H¡$e


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