Concept of Fund Flow Statement

 There are many types of financial documents company makes. Some documents are formal and legal purpose whereas The fund flow statement is a statement that shows the movement of working capital in a fix financial period. 

The statement that shows the movement of funds into or out of business this into or out of business this statement is called fund flow statement. 

According to Anthony- Fund flow statement describes the source from which additional funds were derived and the use to which these funds were put. 

According to Folke- A statement of sources and applications of funds is a technical device designed to analyze the change in the financial condition of business enterprises between two dates. 

Importance:- 

1. It helps in analysis of financial statement like Balance sheet, profit and loss account. 

2. It helps to make policy about dividend. 

3. It helps to fund allocation according to department wise. 

4. It helps in deciding working capital. 

5. It helps in the analysis of financial function of organization. 

6. It solves many perplexing question that arise before Organization about fund. 

7. It helps in making future financial planning of the organization. 

8. It helps to borrow finance from different type of organization. 

9. It also shows the financial position/status of organization. 

10. It also helps optimum utilization of finance.  

Limitations:- 

1. It provides only additional information to organization. Without finance statement there is no more use of fund flow statemt. 

2. It can not show the cause of increasing/decreasing working capital. 

3. It does not reveal any new data of organization. It only arranges earlier dara by a new way.