Objectives of the Fund Flow Statement

Fund flow statement is the statement of sources and uses of fund. Fund flow statement shows the original source from which the cash are receive and the areas that they obtained funds have been applied. Funds flow statement shows various mean by which funds were received during a particular period and the ways in which these funds were applied.

The Objectives of the Fund Flow Statement are

To describe the changes in financial position the goal of funds flow statement is to disclose the cause of changes in the assets, liabilities and value capital between two balance sheet dates. It features the changes economic position of a concern and indicates the various means by which funds were obtained within a particular and the ways to where these funds were employed.

Fund flow statement is to analyze the in business position of a matter. "Balance Sheet" gives a static view of the financial position and the Profit and loss reported by income statement cannot find out about the actual cash out position of a company. Sometimes a strong with high profit might not exactly be able to pay its immediate liabilities due to the shortage of cash. Yet the objective of money statement is to make clear both the causes of various in several assets, financial obligations and capital accounts and their effect on the liquidity position of the care.

With the help of funds flow assertion we get information about the allocation of limited resources with an increase of proficiently and effectively. It gives you the information about the internal and external sources of financing. It gives you data about the unbalance pay for. On the basis of such information a problem can allocate its funds in and long-term areas more properly.

It helps to get Internal and external users of financial claims require funds flow assertion for the purpose of assessing the strengths and weakness of the worried firm. Funds flows affirmation provides information about the changes in net information permit various groups of users to assets and assess the financial position of the firm.