Perfect Describe The Importance Of Fund Flow Statement

Below are some uses of Funds Flow Statement that financial analysts and managers opt for. It has been replaced by the cash flow statement Cash Flow Statement A cash flow Statement contains information on how much cash a company generated and used during a given period. It is valuable and also helps to determine how the funds are financed.

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Following are the uses of this which show its importance.

Describe the importance of fund flow statement. Fund Flow Statement determines the financial consequences of business operations. Since fund flow is a statement which shows the flow of funds over two periods it is also called a statement of changes in financial position. Fund flow statement analysis helps investors in identifying the key areas of utilization of funds for a company during any period along with the key sources of those funds.

It helps the management of a company to define its investment policy by highlighting the changes in working capital. A fund flow statement is a statement prepared to analyse the reasons for changes in the financial position of a company between two balance sheets. 3 Fund Flow Statement.

It is also called a flow of funds statement or a statement of changes in financial position. It is basically used to know where funds have been arranged to invest in the businessThe Source of the fund can be in the form of the issue of shares Issue Of Shares Shares Issued refers to the number of shares. It is a statement of assets and liabilities affecting working capital during an accounting period.

Funds flow statement is prepared on the basis of informations of profit loss statement and two consecutive balance sheets. Fund flow statement is of dynamic nature. The fund flow statement is able to identify the sources of cash and their uses and the cash flow statement starts with looking at the current level of cash and how it leads to the closing balance.

Now-a-days it is being widely used by the financial analysts credit granting institutions and financial managers. After preparing the above two requirements we will prepare the fund flow statement which will comprise all outflow and inflow of funds. No doubt Funds Flow Statement is an important indicator of financial analysis and control.

The cash flow statement measures how well a company manages. Funds flow statement is an important financial tool which analyze the changes in financial position of a firm showing the sources and applications of its funds. It shows the various sources and uses or applications of funds between the two accounting periods.

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