Date post: | 10-Apr-2018 |
Category: |
Documents |
Upload: | neelaraonag |
View: | 215 times |
Download: | 0 times |
of 24
8/8/2019 Funds Flow Analysis 1
1/24
FUNDS FLOW ANALYSISFUNDS FLOW ANALYSIS
8/8/2019 Funds Flow Analysis 1
2/24
B ALANCE SHEET 1B ALANCE SHEET 1
NORMAL FUNDS UTILISATIONNORMAL FUNDS UTILISATIONLIABILITIES (Sources)LIABILITIES (Sources)
Long term sourcesLong term sources::
Share capitalShare capital
Long term debtLong term debt
Short term sources:Short term sources:
Current liabilities
Current liabilities
ProvisionsProvisions
ASSETS (Application)ASSETS (Application)
Long term usesLong term uses::
Fixed assetsFixed assets
Short term usesShort term uses::
InvestmentsInvestments
Current assetsCurrent assets
P&L a/c (loss)P&L a/c (loss)
8/8/2019 Funds Flow Analysis 1
3/24
BALANCE SHEET 2BALANCE SHEET 2OVER TRADING & UNDER CAPITALISATIONOVER TRADING & UNDER CAPITALISATION
LIABILITIES (Sources)LIABILITIES (Sources)
Long term sourcesLong term sources::
Share capitalShare capital
Long term debtLong term debt
Short term sources:Short term sources:
Current liabilitiesCurrent liabilities
ProvisionsProvisions
ASSETS (Application)ASSETS (Application)
Long term usesLong term uses::
Fixed assetsFixed assets
(over trading)(over trading)
Short term usesShort term uses::
InvestmentsInvestments
Current assetsCurrent assets
P&L a/c (loss)P&L a/c (loss)
8/8/2019 Funds Flow Analysis 1
4/24
BALANCE SHEET 3BALANCE SHEET 3OVER CAPITALISATION & UNDER TRADINGOVER CAPITALISATION & UNDER TRADING
LIABILITIES (Sources)LIABILITIES (Sources)Long term sourcesLong term sources::
Share capitalShare capital
Long term debtLong term debt
Short term sources:Short term sources:
Current liabilitiesCurrent liabilities
ProvisionsProvisions
ASSETS (Application)ASSETS (Application)Long term usesLong term uses::
Fixed assetsFixed assets
....
(over capitalisation)(over capitalisation)
Short term usesShort term uses:: InvestmentsInvestments
Current assetsCurrent assets
P&L a/c (loss)P&L a/c (loss)
8/8/2019 Funds Flow Analysis 1
5/24
ILLUSTRATIONILLUSTRATION
(Rs in lakhs)(Rs in lakhs)
LIABILITIESLIABILITIES 3131--0303--20082008 3131--0303--20092009
Share CapitalShare Capital RsRs RsRs
PreferencePreference 40
40
40
40
EquityEquity 8080 8080
Reserves & SurplusReserves & Surplus 8282 106106
Long term loansLong term loans 113113 9696
Short term loansShort term loans 4747 3636
Current liabilitiesCurrent liabilities 3939 4646
TOTALTOTAL 401401 404404
8/8/2019 Funds Flow Analysis 1
6/24
ILLUSTRATION Contd..ILLUSTRATION Contd..
(Rs in lakhs)(Rs in lakhs)
ASSETSASSETS 3131--0303--20082008 3131--0303--20092009
Fixed assetsFixed assets RsRs RsRs
Gross (Original cost)Gross (Original cost) 375375 412412(Less) depreciation(Less) depreciation 167167 203203
Net fixed assetsNet fixed assets 208208 209209
Current assets:Current assets:
InventoryInventory 9090 9393
DebtorsDebtors 4444 6363
Cash on handCash on hand 5959 3939
TOTALTOTAL 401401 404404
8/8/2019 Funds Flow Analysis 1
7/24
SolutionSolution
Step I Ascertain the changes in working capitalStep I Ascertain the changes in working capitalposition in two years as follows:position in two years as follows:
3131--0303--20082008 3131--0303--20092009
Current assetsCurrent assets RsRs RsRs
InventoryInventory 9090 9393
DebtorsDebtors 4444 6363
Cash on handCash on hand 5959 3939
Total (A)Total (A) 193193 195195Current liabilitiesCurrent liabilities
Short term loansShort term loans 4747 3636
Current liabilitiesCurrent liabilities 3939 4646
Total (B)Total (B) 8686 8282
8/8/2019 Funds Flow Analysis 1
8/24
Solution contd..Solution contd..
Statement of changes in working capitalStatement of changes in working capital
DETAILSDETAILS 3131--0303--20082008 3131--0303--20092009
Current assetsCurrent assets 193193 195195
Less:Less:
Current liabilitiesCurrent liabilities 8686 8282
Net Current assetsNet Current assets 107107 113113
Increase in NetIncrease in NetCurrent assetsCurrent assets
(113(113 107)107)66
8/8/2019 Funds Flow Analysis 1
9/24
Solution contd..Solution contd..
Step II Ascertain the increase or decrease inStep II Ascertain the increase or decrease in
other liabilities and assets separately:other liabilities and assets separately:
Step III Ascertain theStep III Ascertain the SourcesSources andandApplicationApplication
of funds as follows:of funds as follows:
SourceSource = Increase in liability OR Decrease in= Increase in liability OR Decrease in
assetassetApplicationApplication = Increase in asset OR Decrease in liability= Increase in asset OR Decrease in liability
8/8/2019 Funds Flow Analysis 1
10/24
Solution contd..Solution contd..
STATEMENT OF SOURCES ANDSTATEMENT OF SOURCES AND
APPLICATION OF FUNDSAPPLICATION OF FUNDS
Source:Source: RsRs
Increase inIncrease in
reserves &reserves &surplussurplus
2424
Increase inIncrease in
DepreciationDepreciation 3636
TOTALTOTAL 6060
Application:Application: RsRs
Increase inIncrease inFixed assetsFixed assets 3737
Increase inIncrease inNet currentNet currentassetsassets
66
Decrease inDecrease interm loansterm loans
1717
TOTALTOTAL 6060
8/8/2019 Funds Flow Analysis 1
11/24
Balance sheets as on 31 MarchBalance sheets as on 31 March
(Rs in lakhs)(Rs in lakhs)
LIABILITIESLIABILITIES 20082008 20092009
Share CapitalShare Capital 2.002.00 3.003.00
Reserves & SurplusReserves & Surplus 0.400.40 0.850.85Secured loansSecured loans 1.001.00 0.860.86
Current liabilities:Current liabilities:
CreditorsCreditors 0.600.60 1.041.04Provision for Income taxProvision for Income tax 0.200.20 0.050.05
Outstanding expensesOutstanding expenses 0.100.10 0.100.10
TotalTotal 4.304.30 5.905.90
8/8/2019 Funds Flow Analysis 1
12/24
Balance sheets as on 31 MarchBalance sheets as on 31 March
(Rs in lakhs)(Rs in lakhs)
AssetsAssets 20082008 20092009
BuildingsBuildings
Less depreciation:Less depreciation:
1.751.75
0.250.25 1.501.50
2.652.65
0.35 2.300.35 2.30
Plant & MachineryPlant & MachineryLess depreciation:Less depreciation:
2.602.600.850.85 1.751.75
3.203.200.95 2.250.95 2.25
Current assets:Current assets:
StocksStocks 0.650.65 0.690.69
DebtorsDebtors 0.150.15 0.180.18
Cash & bank balanceCash & bank balance 0.250.25 1.051.05 0.480.48 1.351.35
TotalTotal 4.304.30 5.905.90
8/8/2019 Funds Flow Analysis 1
13/24
Additional information Additional information
Plant & machinery with original cost ofPlant & machinery with original cost of
Rs. 15,000 (written down value Rs.7,000)Rs. 15,000 (written down value Rs.7,000)
was sold for Rs. 5,000was sold for Rs. 5,000
Prepare:Prepare:
(i)(i) Statement showing changes in working capitalStatement showing changes in working capital
positionposition(ii)(ii) Statement of sources & application of fundsStatement of sources & application of funds
8/8/2019 Funds Flow Analysis 1
14/24
SolutionSolution
STATEMENT OF CHANGES INSTATEMENT OF CHANGES IN
WORKING CAPITALWORKING CAPITAL
Current assetsCurrent assets
Less: Current LiabilitiesLess: Current Liabilities
CreditorsCreditors
NET CURRENT ASSETSNET CURRENT ASSETS
Decrease in net currentDecrease in net current
assetsassets
2008 20092008 2009
1.05 1.351.05 1.35
0.60 1.040.60 1.04
0.45 0.310.45 0.31
((--) 0.14) 0.14
8/8/2019 Funds Flow Analysis 1
15/24
SolutionSolution
Calculation of cash profitsCalculation of cash profits
RsRs
Increase in profitIncrease in profit 0.450.45
Add:Add:
Loss on sale of plant & machineryLoss on sale of plant & machinery 0.020.02 Depreciation on plant & machinery sold 0.08Depreciation on plant & machinery sold 0.08
Depreciation on plant & machinery (2009) 0.10Depreciation on plant & machinery (2009) 0.10
Depreciation on BuildingDepreciation on Building 0.100.10 Provision for outstanding expenses 0.10Provision for outstanding expenses 0.10
TOTAL (CASH PROFIT)TOTAL (CASH PROFIT) 0.850.85
8/8/2019 Funds Flow Analysis 1
16/24
SolutionSolution
Calculation of Machinery purchased during 2008Calculation of Machinery purchased during 2008--0909
DetailsDetails DebitDebit Credit CreditOpening balance 2009Opening balance 2009 2.602.60
Depreciation up to 2008Depreciation up to 2008 0.850.85
Depreciation for 2008Depreciation for 2008--0909 0.100.10
Depreciation on P&M soldDepreciation on P&M sold 0.080.08
Cash (Sale)Cash (Sale) 0.050.05
Loss on saleLoss on sale 0.020.02
Purchases during 2008Purchases during 2008--0909(*Balance figure)(*Balance figure)
*0.75*0.75
Balance c/dBalance c/d (CLOSINGBALANCE(CLOSINGBALANCE2009)2009)
2.252.25
TotalTotal 3.353.35 3.353.35
8/8/2019 Funds Flow Analysis 1
17/24
SolutionSolution
STATEMENT OF SOURCES AND APPLICATIONSTATEMENT OF SOURCES AND APPLICATION
OF FUNDSOF FUNDS
SOURCES:SOURCES: RsRs
Increase in share capitalIncrease in share capital 1.001.00
Profit for the yearProfit for the year 0.850.85Decrease in net current assets 0.14Decrease in net current assets 0.14
Sale of plant and machinery 0.05Sale of plant and machinery 0.05
TOTALTOTAL 2.042.04
8/8/2019 Funds Flow Analysis 1
18/24
SolutionSolution
STATEMENT OF SOURCES AND APPLICATIONSTATEMENT OF SOURCES AND APPLICATION
OF FUNDSOF FUNDS
APPLICATION OF FUNDSAPPLICATION OF FUNDS RsRs
Purchase of buildings 0.90Purchase of buildings 0.90
Purchase of plant & machinery 0.
75Purchase of plant & machinery 0.
75
Repayment of term loan 0.14Repayment of term loan 0.14
Payment of outstanding expenses 0.10Payment of outstanding expenses 0.10
Payment of income tax 0.15Payment of income tax 0.15
TOTALTOTAL 2.042.04
8/8/2019 Funds Flow Analysis 1
19/24
Balance sheets as on 31 MarchBalance sheets as on 31 March
LIABILITIESLIABILITIES 20082008 20092009
Share CapitalShare Capital 1,00,0001,00,000 1,55,0001,55,000
Reserves & Surplus:Reserves & Surplus:General reserveGeneral reserve
Profit & Loss a/cProfit & Loss a/c
50,00050,000
10,00010,000
60,00060,000
17,00017,000Long term loansLong term loans 70,00070,000 50,00050,000
Current liabilities:Current liabilities:
CreditorsCreditors 86,00086,000 95,00095,000Provision for Income taxProvision for Income tax 20,00020,000 30,00030,000
TotalTotal 3,36,0003,36,000 4,07,0004,07,000
8/8/2019 Funds Flow Analysis 1
20/24
Balance sheets as on 31 MarchBalance sheets as on 31 March
ASSETSASSETS 20082008 20092009
BuildingsBuildings 1,00,0001,00,000 1,00,0001,00,000
Plant & MachineryPlant & Machinery
Less depreciation:Less depreciation:
1,04,0001,04,000
50,00050,000 54,00054,000
1,00,0001,00,000
56,00056,000 44,00044,000
FurnitureFurniture
Less depreciation:Less depreciation:
7,0007,000
5,0005,000 2,0002,000
9,0009,000
6,0006,000 3,0003,000InvestmentInvestment 60,00060,000 80,00080,000
Current assets:Current assets:
Cash & bank balanceCash & bank balance 30,00030,000 45,00045,000
SticksSticks 60,00060,000 65,00065,000
DebtorsDebtors 30,00030,000 1,20,0001,20,000 70,00070,000 1,80,0001,80,000
TotalTotal 3,36,0003,36,000 4,07,0004,07,000
8/8/2019 Funds Flow Analysis 1
21/24
Additional informationAdditional information
During the year an item of machinery with anDuring the year an item of machinery with an
original cost of Rs.4,000 (written down valueoriginal cost of Rs.4,000 (written down value
Rs.2,000) was sold for Rs.800Rs.2,000) was sold for Rs.800
Prepare:Prepare:
(i)(i) Statement showing changes in working capitalStatement showing changes in working capital
positionposition(ii)(ii) Statement of sources & application of fundsStatement of sources & application of funds
8/8/2019 Funds Flow Analysis 1
22/24
Balance sheets as on 31 MarchBalance sheets as on 31 March
LIABILITIESLIABILITIES 20082008 20092009
Share CapitalShare Capital 6,00,0006,00,000 7,00,0007,00,000
Reserves & Surplus:Reserves & Surplus:
General reserveGeneral reserve
Profit & Loss a/cProfit & Loss a/c
2,00,0002,00,000
1,00,0001,00,000
2,50,0002,50,000
2,10,0002,10,000
Long term loansLong term loans 3,00,0003,00,000 2,00,0002,00,000
Current liabilities:Current liabilities:
Outstanding expensesOutstanding expenses 10,00010,000 12,00012,000
CreditorsCreditors 1,60,0001,60,000 2,50,0002,50,000
Proposed dividendProposed dividend 30,00030,000 35,00035,000
Provision for Income taxProvision for Income tax 70,00070,000 75,00075,000
TotalTotal 14,70,00014,70,000 17,32,00017,32,000
8/8/2019 Funds Flow Analysis 1
23/24
Balance sheets as on 31 MarchBalance sheets as on 31 March
ASSETSASSETS 20082008 20092009
Fixed assetsFixed assetsLess depreciation:Less depreciation:
10,00,00010,00,0002,00,0002,00,000 8,00,0008,00,000
12,00,00012,00,0002,50,0002,50,000 9,50,0009,50,000
InvestmentInvestment 1,80,0001,80,000 1,80,0001,80,000
Current assets:Current assets:
Cash & bank balanceCash & bank balance 40,00040,000 65,00065,000
SticksSticks 2,00,0002,00,000 2,70,0002,70,000
DebtorsDebtors 2,25,0002,25,000 2,45,0002,45,000
Prepaid expensesPrepaid expenses 10,00010,000 12,00012,000
Miscellaneous expenditureMiscellaneous expenditure 15,00015,000 10,00010,000
TotalTotal 14,70,00014,70,000 17,32,00017,32,000
8/8/2019 Funds Flow Analysis 1
24/24
Additional informationAdditional information
1. During the year fixed assets with written1. During the year fixed assets with written
down value Rs.10,000 (Depreciation writtendown value Rs.10,000 (Depreciation written
Off Rs 30,000 was sold for Rs.8,000Off Rs 30,000 was sold for Rs.8,000
2. Proposed dividend of year 2008 was paid in 20092. Proposed dividend of year 2008 was paid in 20093. Income tax paid in 2009 was Rs 55,0003. Income tax paid in 2009 was Rs 55,000
Prepare:Prepare:
(i)(i) Statement showing changes in working capitalStatement showing changes in working capitalpositionposition
(ii)(ii) Statement of sources & application of fundsStatement of sources & application of funds