Fund Flow Statement | Uses, Benefits, Significance, Importance

Fund flow statement

Uses, benefits, importance and significance of Fund flow statement.

Funds flow statement is one of the tool of management accountant. Hence, it helps many ways to the management and outsiders.

Uses, Benefits, Significance & Importance of Fund flow statement

The following are the uses, significance or benefits of funds flow statement.

1. The financial resources of the company are analyzed in detail and disclose the changes made between the two balance sheet dates.

2. It gives an answer to the question of there is an inadequate liquid cash position in spite of business making more and more profits.

3. It shows the extent funds were received the ways of usage for a specific period.

4. It shows the possibility of paying more dividend than current earnings or paying normal dividend in the presence of net loss for the period.

5. The cost of capital of the business can be computed on the basis of the sources of funds flow statement.

6. It shows the usage of earned profits of the current year.

7. The sources of previous year funds flow statement may act as a guide for getting funds for future requirements.

8. Sometimes, the company has high liquid cash position even though, there is a net loss for the specific period. The reason for such position is find out through funds flow statement.

9. The application of funds can provide a basis for selection of investment proposals or future capital expenditure decisions.

10. The overall credit worthiness of the company can find out on seeing the funds flow statement.

11. The strength and weakness of financial position of the company are identified on seeing the funds flow statement.

12. It helps the management to allot the inadequate resources to meet the requirements of business at productive level.

13. It highlights the financial consequences of business operation.

14. It tests the effective use of working capital by the management during a particular period.

15. It helps the management to frame or change the financial policy of the company.

16. It suggests ways to improve working capital position of the company.

Leave a Reply




Recent Posts


Related pages


disadvantages of job costingtransfer pricing advantages disadvantagesprecis how to writevariance wikipediarole of sebi in regulating the indian stock marketdebentures typescorporate veil definitionhow to calculate budgeted cash receiptsdefine filing cabinetdoctrine of ultra vires casesexamples of vertical mergerproduct mix width definitionmuv meaningmeaning of mechanisationaverage clause insurance formulawhy most countries have mixed economiescentralised system definitionaverage inventory turnover formulaadvantages and disadvantages of forward contractsquestionnaire advantages and disadvantageswhat are the advantages and disadvantages of division of laboureffective delegationmoa meanssystematic sampling disadvantagesblueprint advertising agencydefinition of perilsbes salesdefinition of business cycle in macroeconomicsprecis writingdifference between otc and exchangeaccounting rate of return methodmerchant capital definitionfull form of eximwhat are the similarities between cost accounting and financial accountingmethods of calculating transfer pricingconsumer co-operativesformula for stock turnoveradvantages and disadvantages of advertisementsadvantages and disadvantages of oligopoly competitionicici commercial bankingfunctions of international monetary fundcaveat emperoradvantages of dematerialisationinadequatesfeatures of zero based budgetingbreak even ebit formulawho is merchant bankerdepletion method of depreciationconsumerism in indiamixed branding strategysidbi functionsstratified quota samplingjoint stock trading company definitionqualification and disqualification of an auditormeaning of alpha numericusefulness of cash flow statementequity gearing ratiotransactional marketing and relationship marketingdifference between estimating and costingeconomic batch quantity modelsoundplan essentialconvertible preference sharesmeaning of hyper marketwhat is diseconomies of scaleforms of business organization and their advantages and disadvantagescurrent ratio for retail industryessentials of a valid contract pdfmeaning of indisciplinedumping economics definitionsimilarities of financial accounting and management accountingreceivable turnover analysismanagement accounting marginal costingdefinition activity based costing