A financial statement that shows the sources from which funds were obtained and the uses to which they were applied during a period.
A Funds Flow Statement (also called Statement of Changes in Financial Position) analyzes changes in working capital between two balance sheet dates. It identifies where long-term funds came from (operations, new loans, share issues, asset sales) and where they went (asset purchases, loan repayments, dividends). Unlike a Cash Flow Statement (which tracks actual cash), Funds Flow uses the concept of 'working capital' (current assets minus current liabilities). It's less common now as Ind AS/IFRS mandate Cash Flow Statements, but remains important for understanding long-term financial decisions.
Company's fund flow for FY2025: Sources — Profit ₹20,00,000, Term loan ₹50,00,000, Sale of old machinery ₹5,00,000 = ₹75,00,000. Uses — New plant ₹60,00,000, Loan repayment ₹8,00,000, Dividends ₹5,00,000 = ₹73,00,000. Net increase in working capital: ₹2,00,000.
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
Funds Flow tracks changes in WORKING CAPITAL (current assets – current liabilities) and focuses on long-term financial decisions. Cash Flow tracks actual CASH movements categorized as Operating, Investing, and Financing activities. Cash Flow is mandatory under Ind AS; Funds Flow is optional but useful for working capital analysis.
While not mandatory under current accounting standards (replaced by Cash Flow Statement for statutory reporting), it remains valuable for: bank loan analysis (lenders assess fund utilization), working capital management, long-term financial planning, and academic understanding of how businesses are funded.
A financial statement showing the sources from which funds were obtained and the uses to which they were applied during a period, focusing on working capital changes.
The net amount of cash and cash equivalents moving into and out of a business during a specific period.
The difference between a company's current assets and current liabilities, representing the short-term liquidity available for day-to-day operations.
Formal records of a business's financial activities, comprising the Balance Sheet, Profit & Loss Statement, Cash Flow Statement, and Notes to Accounts.
A financial statement that shows a company's assets, liabilities, and equity at a specific point in time.
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