7/25/2019 Summary of the Differences Between Cash Flow Statement and Funds Flow Statement

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Diferences Between Cash Flow Statement And Funds Flow Statement

Followings are the main diferences between cash ow statement and unds ow

statement.

1.ConceptCash ow statement is based on narrow concept o unds, which considers changes in

cash. Funds ow statement is based on the changes in woring capital which considers

both the changes in cash as well as other components o current assets and current

liabilities.

!.Basis " #reparationCash ow statement is prepared on cash basis. Funds ow statement is prepared on

accrual basis.

$. %oring capitalCash ow statement does not re&uire use o changes in woring capital because all the

changes in assets and liabilities are summari'es in cash ow statement. Funds ow

statement re&uires to use o separate statement o changes in net woring capital.

(.)in*he preparation o cash ow statement considers onl+ those transactions that are lined

with ow o cash. *he preparation o unds ow statement considers those transactions

that are lined with ow o unds along with actual cash.

.-seulnessCash ow statement is more useul in short term anal+sis and cash planning. Funds ow

statement is more useul in longterm anal+sis o /nancial planning.