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5th Sem Financial Management Notes

Difference Between Cash Flow and Funds Flow Analysis

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Last updated: 17 July 2023

COMPARISION OF FUND FLOW STATEMENT & CASH FLOW STATEMENT

 

S.No.         FUND FLOW STATEMENT                        CASH FLOW STATEMENT
    1. This analysis shows the changes in working capital fixed assets etc. between two periods. This analysis shows the changes in cash position between two periods.
    2. Increase in funds does not always means increase in cash. Increase in cash does always mean increase in fund.
    3. Fund flow analysis notes the overall changes in funds of the company and we can decide overall stability of business unit. Cash flow analysis notes the changes in cash position only and one can’t know the stability of Co. by this analysis.
    4. It reveals the long term stability of business. It reveals the short term cash position of the business.
    5. Management can take long term major decisions with the help of this statement. Management can take short term decisions regarding cash only.
    6. This analysis includes cash flow analysis because cash is a part of working capital.  This analysis does not include fund flow analysis because this covers only cash transactions.
    7. While preparing statement of changes in working capital if current assets increase or current debts decrease, working capital increases. In cash flow analysis increase in current assets or decrease In current debts means reduction in cash.

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Syllabus BHM307

01 Financial Management

  1. MEANING & SCOPE
    1. Meaning of business finance
    2. Meaning of financial management
    3. Objectives of financial management

02 Financial Statement

  1. ANALYSIS AND INTERPRETATION
    1. Meaning and types of financial statements
    2. Techniques of financial analysis
    3. Limitations of financial analysis
    4. Practical problems

03 Ratio Analysis

  1. Meaning of ratio
  2. Classification of ratios
  3. Profitability ratios
  4. Turnover ratios
  5. Financial ratios
  6. Du Pont Control Chart
  7. Practical Problems

04 Funds Flow Analysis

  1. Meaning of funds flow statement
  2. Uses of funds flow statement
  3. Preparation of funds flow statement
  4. Treatment of provision for taxation and proposed dividends (as non-current liabilities)
  5. Practical problems

05 Cash Flow Analysis

  1. Meaning of cash flow statement
  2. Preparation of cash flow statement
  3. Difference between cash flow and funds flow analysis
  4. Practical problems

06 Financial Planning

  1. MEANING & SCOPE
    1. Meaning of Financial Planning
    2. Meaning of Financial Plan
    3. Capitalisation
    4. Practical problems

07 Capital Expenditure

  1. Meaning of Capital Structure
  2. Factors determining capital structure
  3. Point of indifference
  4. Practical problems

08 Working Capital Management

  1. Concept of working capital
  2. Factors determining working capital needs
  3. Over trading and under trading

09 Basics of Capital Budgeting

  1. Importance of Capital Budgeting
  2. Capital Budgeting appraising methods
  3. Payback period
  4. Average rate of return
  5. Net Present Value
  6. Profitability index
  7. Internal rate of return
  8. Practical problems