Spectacular Managerial Uses Of Fund Flow Statement

It offers valuable information in regards to the companys working funding and investing activities within a particular period.

Managerial uses of fund flow statement. Below are some uses of Funds Flow Statement that financial analysts and managers opt for. Fund Flow On the accounting side the fund flow statement was required by GAAP between 1971 and 1987. Fund flow statement helps in understanding the effectiveness of use of working capital.

Ad A Financial Professional Located in Coeur dAlene Mo. Ad A Financial Professional Located in Coeur dAlene Mo. The users of fund flow statement such as investors creditors bankers government etc can understand the managerial decisions regarding dividend distribution utilization of funds and earning capacity with the help of fund flow statement.

The technique of funds flow analysis is widely used by the financial analyst credit granting institution and financial managers in performance of their jobs. The funds flow statement helps the management in assessing the activity of working capital and whether the working capital has been effectively used to the maximum extent in business operations or not. It displays the sources from which an organization or a company manages to generate cash and all the areas where the obtained cash is used during an accounting period.

Funds flow statement is also known as statement of sources and uses of funds. The statement of sources and uses of funds is a statement that condenses the financial statements and financial plan in one statement. It shows whether the sources of funds coincides with its application and indicates the accuracy of a firms financing and investment decisions.

It summarizes the financing and investing activities of the enterprise during an accounting period. Funds flow statement helps the management in deciding its future course of plans and also it acts as a control tool for the management. 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.

Uses of Funds Flow Statement. Fund flow statement is a statement that compares the two balance sheets by analyzing the sources of funds debt and equity capital and the application of funds assets and its reasons for any differences. This statement simply shows the increase in working capital or a decrease in the working capital of the company.