ABSTRACT

A fund flow statement is a summary of a firm's inflow and outflow of funds.It tells us from where funds have come and where funds have gone. Fund flows statement can indicate whether sourcing of funds and their use match in sense and also reveal the prudence or otherwise of a firm's financing and investment decisions The financial statement of the business indicate assets, liabilities and capital on aparticular date and also the profit or loss during a period. But it is possible that there is enough profit in the business and the financial position is also good and still there may be deficiency of cash or of working capital in business. If the management wants to find out as to where the cash is being utilized, financial statement cannot help. Therefore,a statement is prepared of the sources and applications of funds from where Working Capital comes andwhere it is utilized. This is called Fund Flowstatement. Funds Flow Statement is an analytical tool in the hands of financial manager. The basic purpose of this statement is to indicate on historical basis the changes in the working capital i.e., where funds came from and where they are used during a given period.The funds flow statement or statement of changes in financial position is a statement of flows, it measures the changes that have taken place during two balance sheet dates. According to R.N. Anthony, Fund Flow is a statement prepared to indicate the increase in cash resources and the utilization of such resources of a business during the accounting period.