Complete Proforma of Fund Flow Statement: A Step-by-Step Guide
Welcome to this comprehensive guide on preparing a Fund Flow Statement. For commerce and finance students, understanding the flow of funds is crucial for analyzing a company’s financial health. This post provides a clear, reliable, and accurate proforma based on standard accounting principles to help you structure your statements correctly.
1. Statements Required for Fund Flow Analysis
Before arriving at the final Fund Flow Statement, you need to prepare the following essential statements and accounts:
- Statement of Changes in Working Capital: To determine the net increase or decrease in working capital.
- Funds from Operations: To calculate the funds generated strictly from the core business activities.
- Statement of Sources and Application of Funds: The final statement summarizing the inflows and outflows.
- Any Other Necessary Accounts: Such as Fixed Asset Accounts or Provision for Tax Accounts to find hidden information.
2. Proforma: Funds from Operations
This statement adjusts the net profit given in the Profit & Loss Account for non-fund and non-operating items.
| Particulars | Amount (₹) |
|---|---|
| Closing Balance of Profit & Loss A/c | xxx |
| Add: (A) Non-Fund Items (Non-Cash) & Non-Operating Expenses | |
| • Depreciation | xxx |
| • Loss on Sale of Fixed Assets | xxx |
| • Premium on Redemption of Debentures & Preference Shares | xxx |
| • Discount on Issue of Shares and Debentures (Written off) | xxx |
| • Return of Intangible Assets (e.g., Goodwill, Patents, Trademarks) | xxx |
| • Return of Fictitious Assets | xxx |
| Add: (B) Appropriations / Provisions | |
| • General Reserve | xxx |
| • Debenture Sinking Fund | xxx |
| • Proposed Dividend | xxx |
| • Interim Dividend | xxx |
| • Tax Provision | xxx |
| Less: Non-Operating Incomes & Opening Balances | |
| • Opening Balance of Profit & Loss A/c | (xxx) |
| • Interest Received | (xxx) |
| • Dividend Received | (xxx) |
| • Refund of Tax | (xxx) |
| • Profit on Sale of Fixed Assets | (xxx) |
| • Change in Stock | (xxx) |
| Funds from Operations | xxx |
3. Proforma: Statement of Sources and Application of Funds
This is the final statement that balances the total sources of funds against the total applications of funds.
| Sources of Funds | Amount (₹) | Application of Funds | Amount (₹) |
|---|---|---|---|
| Issue of Shares | xxx | Redemption of Shares | xxx |
| Issue of Debentures | xxx | Redemption of Debentures | xxx |
| Borrowed Loan | xxx | Payment of Loan | xxx |
| Sale of Fixed Assets | xxx | Payment of Tax | xxx |
| Sale of Investments | xxx | Payment of Dividend | xxx |
| Non-Trading Income | xxx | Purchase of Fixed Assets | xxx |
| Fund from Operations (Profit) | xxx | Purchase of Investments | xxx |
| Decrease in Working Capital | xxx | Fund from Operations (Loss) | xxx |
| Increase in Working Capital | xxx | ||
| Total | xxx | Total | xxx |
Final Tip: Always ensure that the Total Sources of Funds match the Total Applications of Funds. If they tally, your fund flow statement is perfectly aligned!
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