Prepare the fund flow statement, which shows the net increase or decrease in funds and how the funds were generated and utilised during the period. Calculate net increase or decrease in funds by subtracting the total outflows from the total inflows of funds. Prepare a net income statement of sources and uses of funds, which shows the total inflows and outflows of funds during the period. Identify the sources and uses of funds during the period, such as the sale of assets or issuance of debt and the payment of dividends or retirement of debt. It determines the net increase or decrease in working capital. Now, subtract the total increases in current liabilities from the total increase in current assets. The difference between net current assets and liabilities determines the net growth or reduction in working capital. Take into account the change in current assets and current liabilities. Also, determine the changes in the other balance sheet accounts during the period you prepare the Fund Flow Statement Format.ĭetermine the changes in working capital. The fund flow statement format is a valuable tool for businesses to monitor and manage their cash flow, identify potential cash management issues, plan their financial activities, and comply with regulatory requirements.įirstly, identify the beginning and ending balance of the cash and cash equivalents account. Preparing a fund flow statement format in PDF can help businesses comply with these regulatory requirements and avoid penalties. In some jurisdictions, businesses must prepare and submit fund flow statements as part of their financial reporting obligations. By analysing the sources and uses of funds, a business can plan its cash flow more effectively and make informed financial decisions. The fund flow statement helps a business plan its financial activities, such as capital investments, dividend payments, and debt repayments. Addressing these issues can help the business optimise its cash management and improve its overall financial performance. Identifying cash management issues:īy analysing the fund flow statement format in Excel, a business can identify potential cash management issues, such as delays in collections, overinvestment in inventory, or underutilisation of assets. By tracking cash inflows and outflows, a business can identify potential cash shortages and take appropriate measures to address them. The fund flow statement format provides an analysis of the changes in the cash position of a business, allowing it to monitor its cash flow more effectively. It can help analyse these activities’ impact on the business’s overall financial position. By tracking the movement of funds, a business can identify the sources of cash inflows and outflows. The fund flow statement helps a business understand the sources and uses of funds over a specific period. They are: Understanding the sources and uses of funds: There are several benefits of preparing a fund flow statement format for a business. This section lists the opening and closing balances of cash for the business at the beginning and end of the period, respectively. You calculate it by subtracting the total cash used from the total cash generated. The net change in cash: This section calculates net change in cash for the business during the period. This section lists the various uses of funds for the business during the period, including:Ĭash used in operating activities: It is cash spent on the primary operations of the business, such as payments to suppliers and employees.Ĭash used in financing activities: It includes cash used to repay loans or dividends to shareholders.Ĭash used in investing activities: This includes cash used to purchase assets, such as property, plant, and equipment, or investments. Examples include sales revenue and collections from customers.Ĭash from financing activities: This includes cash raised from external sources, such as loans, issuing stocks, or bonds.Ĭash from investing activities: It includes cash generated from the sale of assets, for example, property, plant, and equipment or investments. It lists the various sources of funds for the business during the period, including:Ĭash from operating activities: It includes cash generated from the primary operations of the business. Here are the table of content of a fund flow statement: Sources of funds: The statement has two sections: the sources of funds and the uses of funds. A Fund Flow Statement Format helps analyse the sources and uses of funds for a business over a specific period.
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