Difference Between Cash Flow And Fund Flow

1. What is Cash Flow Statement? A cash flow statement is an important financial document that shows the entrance and outflow of cash in a company. The cash flow applicability statement is one of the most significant pieces in fundamentally analysing a firm.One of the key goals of a cash flow statement is to describe changes in the company's cash position over a specific time period and whether or not a company is making profits that can be reflected in cash. In other words, a cash flow statement is based on the cash foundation of accounting and records transactions when actual cash moves in and out of the business over a defined time period, which can be a year, a half year, or even a quarter.It differs from profit and loss accounts in that it indicates a company's financial success over a given period by taking into account accruals and deemed payments such as debtors that have not yet been turned into cash.

2. What is Fund Flow Statement? A fund flow statement is a financial statement that summarizes the changes in a company's working capital over a specific period of time. It provides information about the sources and uses of a company's funds, including cash inflows and outflows, investments in fixed assets, and changes in long-term liabilities. The fund flow statement typically includes two sections: sources of funds and uses of funds. The sources of funds section shows how a company has generated cash during the period, such as through operating activities, financing activities, or investing activities. The uses of funds section shows how the cash generated has been used, such as to purchase fixed assets, repay debt, pay dividends, or invest in securities. The fund flow statement is useful for analyzing a company's financial health and identifying trends over time. It can be used by investors and creditors to evaluate a company's ability to generate cash, manage its working capital, and fund its operations.

3. Difference between Cash flow Statement and Fund Flow Statement Cash flow statement and fund flow statement are both financial statements that provide information about the inflow and outflow of funds in a business. However, there are some key difference between cash flow and fund flow statements: Purpose: The primary purpose of the cash flow statement is to report the cash inflows and outflows of a business during a particular period. The purpose of the fund flow statement is to report the changes in the financial position of a business over a period of time.  Basis of preparation: The cash flow statement is prepared on the basis of cash transactions during the period, while the fund flow statement is prepared on the basis of both cash and non-cash transactions during the period.  Focus: The cash flow statement focuses on the liquidity position of a business, i.e., its ability to generate cash to meet its short-term obligations. The fund flow statement focuses on the changes in the working capital of a business, i.e., the difference between current assets and current liabilities.  Contents: The cash flow statement shows the inflow and outflow of cash under three categories - operating activities, investing activities, and financing activities. The fund flow statement shows the sources and uses of funds under two categories - sources of funds and uses of funds.  In summary, while both statements provide information about a business's cash inflows and outflows, the cash flow statement provides information about the liquidity position of the business, while the fund flow statement provides information about the changes in the working capital of the business over time.