A Cash Flow Statement Can Be More Useful Than A Funds Flow Statement,is It?


3 Answers

amber Jhon Profile
amber Jhon answered
A fund flow statement is the one which can be designed to allocate the funds and the expenditures in a specific period of time. It is more like a budgeted cash flow. On the other hand, a Cash flow shows the inflows and outflows of funds available to the company. I think a cash flow is more useful as compare to the fund flow statement because a fund flow statement can just give a view of how the cash will be used and from where it will come. On the other hand, cash flow statement shows the liquidity of the company to meet it's goals. Cash flow statement shows all of the money and cash transactions of the company, which are very important to be understood because after all 'CASH IS KING'. Cash flow statement tells about cash used and achieved from operating activities, financing and investing activities. Therefore, it is more organized and informative as compare to fund flow statement.
amber Jhon Profile
amber Jhon answered
Basically a fund flow statement is the one which gives the idea about the sources and utilization of funds. It is admitted that the cash flow statements are more useful as compare to the funds flow statements because cash flow statement not only shows the sources and uses of funds but it also shows the effectiveness of the allocation of funds. No doubt, "Cash is king", and cash flow statement provides the free cash flow available to the company. Moreover, fund flow statement just gives the account of the uses of funds and it has nothing to do with the financing and investing decisions of the company but cash flow statement gives the details about such decisions of the company.
Yasir Baqar Profile
Yasir Baqar answered
Nope, the evidences provided by Amber aren't enough to show the usefulness of more Cash flow than fund flow.

Basically, both are of different nature. Fund flow shows the Working Capital of the firm while cash flow is the statement showing the activities of Cash in a firm.

Simply, fund flow shows circulation of funds of a company & Cash flow shows cash circulation by or in a company.

So both have their own importance.

Answer Question