Financial analysis
Summary :
Table of Contents
- Introduction
- Meaning and introduction
- Need and importance of funds flow statement
- Profile of the industry
- Problems faced
- Export of the plastic goods
- Prospects
- Understanding important concepts
- Concept of funds
- Concept of flow
- Concept of funds flow statement
- Difference between funds flow statement and income statement
- Difference between funds flow statement and position statement
- Uses of funds flow statement
- Statement of changes in working capital
- Funds from trading activities of operating profit
- Statement of sources and application of funds
- Data analysis and interpretation
- Conclusions, findings and suggestions
- Bibliography
Abstract
One of the most important techniques of financial analysis is a preparation of funds flow statement. It is the statement which portrays the changes in the financial position of an enterprise. Balance sheet and income statement do not present a comparative picture, even if placed side by side in that much clarity as the statement of changes in financial position which focuses on the sources and uses of funds.
Funds flow statement is a technical device designed to highlight the changes in the financial condition of a business enterprise between the opening and closing balance sheet dates. The flow of funds results in mainly profits of a business due to business operations. And as has been well said that "a business with an income at it heals furnishes always oil for its own wheels", it is the profit which becomes main sources of funds for a business. However, profitable companies can also be anemic with respect to working capital and since working capital is the life blood of an enterprise, its shortage can disturb the operating cycle of the business. It is this concept of 'funds', the flow which is to be examined in detail as to its sources and applications so as to know the net increase or decrease in working capital over a period of time, usually a year.
Funds flow statement is a technical device designed to highlight the changes in the financial condition of a business enterprise between the opening and closing balance sheet dates. The flow of funds results in mainly profits of a business due to business operations. And as has been well said that "a business with an income at it heals furnishes always oil for its own wheels", it is the profit which becomes main sources of funds for a business. However, profitable companies can also be anemic with respect to working capital and since working capital is the life blood of an enterprise, its shortage can disturb the operating cycle of the business. It is this concept of 'funds', the flow which is to be examined in detail as to its sources and applications so as to know the net increase or decrease in working capital over a period of time, usually a year.
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