Difference Between Cash Flow and Funds Flow Analysis

Difference Between Cash Flow and Funds Flow Analysis

S.No.        FUND FLOW STATEMENTCASH FLOW STATEMENT
    1.This analysis shows the changes in working capital fixed assets etc. between two periods.This analysis shows the changes in cash position between two periods. Cash Flow Statement is based upon cash basis of accounting.
    2.Increase in funds does not always means increase in cash.Increase in cash does always mean increase in fund.
    3.Fund flow analysis notes the overall changes in funds of the company and we can decide overall stability of business unit.Cash flow analysis notes the changes in cash position only and one can’t know the stability of Co. by this analysis.
    4.It reveals the long term stability of business.It reveals the short term cash position of the business.
    5.Management can take long term major decisions with the help of this statement.Management can take short term decisions regarding cash only.
    6.This analysis includes cash flow analysis because cash is a part of working capital. This analysis does not include fund flow analysis because this covers only cash transactions.
    7.While preparing statement of changes in working capital if current assets increase or current debts decrease, working capital increases.In cash flow analysis increase in current assets or decrease In current debts means reduction in cash.

Cash Flow Statement Format

Difference Between Cash Flow and Funds Flow Analysis
Difference Between Cash Flow and Funds Flow Analysis

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