TABLE OF CONTENTS CHAPTER
TITLE INTRODUCTION 1.1 Introduction 1.2 Need and I!ortance o" t#e Stud$ 1.% O&'ecti(e) o" t#e Stud$
1
1.* Sco!e o" t#e Stud$ 1.+ Re)earc# ,et#odo-o$ 1./ Liitation) o" t#e Stud$ 1.0 Oraniationa- Stud$
2
Literature Sur(e$ Literature Re(ie3
%
Co!an$ Pro"i-e
*
Data Ana-$)i) And Inter!retation
+
Findin) And Conc-u)ion)
/
Bi&-iora!#$
PAGE NO
CHAPTER 1 INTRODUCTION
1.1 INTRODUCTION
FUNDS FLO4 STATE,ENT5 STATE,ENT5 The basic financial statement i.e., the balance sheet and profit and loss account (or) income statement of the business, reveal the net effect of the various transaction on the operational and financial position of the assets and liabilities of an undertaking at particular point of time. It reveals the financial status of the company. The assets side of a balance sheet shows of the deployment of resources of an undertaking while the liabilities side indicates its obligation i.e., the manner in which these resources were obtained. The profit and loss account reflects the results of the business operations for a period of time. It contains a summary expenses incurred and the revenue realized in an accounting period. oth these statement provide the essential basis information on the financial activities of a business. The balance sheet give a static view of the resource(liabilities) of a business and uses(assets) to which these resources have been put at a certain point of time. It does not disclose the close for changes in the assets and liabilities between two different points of time. The profit and loss account, in a general way, indicates the resources an undertaking and which do not operate through profit and loss account. Thus another statement has to prepare to show the change in the assets and liabilities from the end of one period of time to the end of another period of time. The statement is called a statement of changes in financial position or a !unds !low "tatement. The !unds !low "tatement is a statement which shows the movement of funds and is a report of the financial operations of the business undertaking. It indicates various means by which funds were obtained during a particular period and the
way to which these funds were employed. In simple words, it is a statement of sources and applications of funds.
,EANING AND CONCEPT OF FLO4 OF FUNDS5 The term #!low$ means movement and includes both #inflow$ and #outflow$ the term #flow of funds$ means transfer economic values from one asset e%uity to another flow funds is said to have taken place when any transaction of the transaction. If the effect of transaction result in the increase of funds, it is called a source of funds and if it results in the decrease of funds, it is known as application of funds. !urther, in case the transaction does not change funds. It is said to have not resulted in the flow of funds. &ccording to the working capital concept of funds, the term #flow of funds$ refers to the movement of funds in the working capital. If any transaction result in the increase in working capital it is said to be a source or inflow of funds and it result in decrease of working capital, it is said to be an application or out flow funds. In simple language funds move when a transaction effects, i)
& current assets and a fixed assets or,
ii)
& fixed and a current liability,
iii)
& current asset and a fixed liability,
iv)
& fixed liability and current liability. &nd funds do not move when the transaction effects fixed assets and fixed liability or current assets and current liabilities.
1.2 NEED AND I,PORTANCE
!unds !low "tatement is an important financial tool, which analyze the changes in financial position of a firm showing the sources and applications of its funds. It provides useful information about the firm$s operating, financing and investing activities during a particular period. The following points highlight the importance of !unds !low "tatement. ') !unds !low "tatement helps in identifying the change in level of current assets investment and current liabilities financing. ) !unds !low "tatement helps in analyzing the changes in working capital level of a firm. ) !unds !low "tatement shows the relationship of net income to the changes in funds from business operation. *) !unds !low "tatement report about past fund flow as an aid to predict future funds flow. +) !unds !low "tatement helps in determining the firm$s ability to pay interest and dividend, and pay debt when they become due. ) !unds !low "tatement shows the firm$s ability to generate long term financing to satisfy the investment in long term assets. -) !unds !low "tatement helps in identifying the factor responsible for changes in assets, liabilities and owner$s e%uity at two balance sheet date.
1.% OB6ECTI7ES
') To analyze the changes in assets and liabilities from the end of one period of the time to the end of another period of time. ) To know various needs for which funds were obtained during a particular period based in which these funds were employed. ) To understand flow of funds in current or non current accounts. *) To find out the sources form which additional funds were derived and the use to which their sources were put. +) To indicated the relationship between profits from operations, distribution of dividends and rising of new capital or term loans. ) To point out the financial strengths and weaknesses of the business. -) To inform as to how the loans to the business have been used.
1.* RESEARCH ,ETHODOLOG8
esearch methodology is a detailed study of the sub/ect which uses a set of methods to perform the research methodology is a framework of the methods and procedures carried on for ac%uiring information needed. It is a blue print according to which research is conducted The data is of two types0 ') 1I2&3 4&T& ) "56784&3 4&T&
PRI,AR8 DATA5
1rimary data has been collected from the people of the organization which is also called first hand data. The data collected from primary source includes pro/ect guides, approaching the financial department heads, the self help groups, the branch manager and few employees of the company
SECONDAR8 DATA5
The secondary data was collected from published and unpublished manuals, records, broachers, files etc., of the organization. The secondary information was collected from the company manuals and office records pertaining to production, financial position and welfare activities.
1.+ SCOPE
!unds !low "tatement is a Technical 4evice to analyze the changes in the financial condition of the business enterprise between two dates. This funds flow statement is a statement which indicates various means by which the funds have been obtained during a certain period and the ways to which these funds have been used during the period. The term funds used here means working capital that is the excess of current assets over current liabilities. It is an essential tool for the financial analysts and is of primary importance to the financial management. ') The present study focuses as sources of funds and applications of funds for a period of time. ) The study is confirmed to find out the changes in the financial position of the 2ind 9inks 1vt 9td between the beginning and the ending financial date. ) This !unds !low "tatement is a statement which indicates various means by which the funds have been obtained during a certain period. *) The basic purpose of funds flow statement is to reveal the changes in the working capital on the two balancing dates. +) It helps in the analysis of financial operations. ) It helps in the formation of realistic dividend policy.
1./ LI,ITATIONS
') It should remember that a !und !low "tatement is not a substitute of an income statement or a balance sheet. ) It provides only some additional information as regards in working capital. &s such it must be remembered that funds flow statement is not a substitute of the income statement. ) It cannot reveal continuous changes. *) The study based on the available annual reports and internal information only. +) It provides information about changes in the working capital only and ignores information about changes in cash, which are more relevant and important than working capital. /9 It is prepared taking into consideration only funds items and non funds
items are ignored. &s such, it is complete and unscientific . 09 Time constraint is another limitation for the study because the study is
limited to *+4ays. :9 The information is mostly depends upon the secondary data.
1.0 ORGANI;ATIONAL STUD8
7rganization of the study deals with the arrangement of the entire study. The entire work is organized in order to facilitate easy identification of + chapters. CHAPTER<15
This refers with the introduction part which involves a brief introduction of !unds !low "tatement, the need and importance$s of study, ob/ectives of the study, research methodology, "cope, limitations and structure of the stud y.
CHAPTER<25
6hapter deals with literature review. !unds !low "tatement is a "tatement which shows the movement of funds and is a report of the financial operations of the business undertaking. It is a statement of sources and applications of funds.
CHAPTER<%5
6hapter deals with company profile. 2i8d 9i8ks$ IT :4 9abs 1vt. 9td. Is a software engineering services company in the business of providing Information Technology based solutions to various business entities operating in different segment of the company.
CHAPTER<*5
6hapter * deals with the analysis and interpretations. The employees in company general felt that the work culture in the company is good.
CHAPTER<+5
This covers with the conclusion of the study and suggestions. The end of the report consists of bibliography.
CHAPTER = 2 LITERATURE SUR7E8 LITERATURE RE7IE4
LITERATURE SUR7E8 Survey-1: Title: !unds flows into tax effective 75I6s and &ustralian based funds has held
up well. "ource0 Traders 2agazine
The latest Good Returns' survey of tax;effective offshore funds shows that funds flow into <=;based 7pen;5nded Investment 6ompanies held up well in the "eptember %uarter compared to the rest of the industry. 8et funds flow (applications minus redemptions) for the %uarter was >*. mill, exactly the same figure as it was in ?une %uarter. @hile funds flow was positive the total amount of money invested in the sector took a hit from poor fund performance with net assets under management growing /ust AB to >A. mill in the %uarter.
These figures compare well with a very flat %uarter for mainstream managed fund sector. &ccording to researchers !und "ource the 8ew Cealand domiciled funds had net funds flows of >D.' mill, which made it the worst %uarter for the industry since ?une E'E It says the "eptember %uarter figure was down A'B on the >+* mill figure recorded for the previous %uarter this year. The second part of the Good Returns' survey covers money invested into tax; effective &ustralian;based funds. There are three confirmed funds in this area, including 2oney 2anagers !irst "tep 2ortgage fund, which is run by 8C !unds 2anagement, and two !rank ussell !unds (international shares and international bonds) which are market as &8CFs &scent investment programmer. !irst "tep continued to attract significant volumes of new investment, with a net funds flow of >D mill, taking it to >'D mill net assets under management.
<hough there are only three funds included in this part of the survey, it is understood that other &ustralian based funds are being operated by managers, and %uite a few managers are looking at establishing funds offshore to get around issues of paying tax on capital gains. <hough there are concerns that these funds could lose their tax;advantage if the Government adopts the risk free return model (!2) advocated by the 2c9eod tax review, that is unlikely to happen soon.
SURVEY-2: Title- Funds Flow Model and Production Management SourceFUNDS & FLOWSElements crossing the boundaries classifed in: Funds: elements entering and leaving the rocess! roviding certain Services over a certain eriod" E#amle: $or%ers in shoes roduction Flows: elements either entering (as input) or leaving (as output) the Process Ex.: Input flows: energy and leather in shoes production !utput flows: shoes and waste generated in the shoes production Process. strong connections "etween the analysis of idleness reduction for processes in line and some issues addressed " y production (and inventory ) management. The fund#flow model is: $ot suited for: %) &eneral e'uili"rium analysis ) nalysis of reciprocal influences "etween economic sectors *) nalysis of optimal patterns of utili+ation of fixed capital.
,uited for: %) nalysis of organi+ational aspects of production processes ) nalysis of inter#relations "etween production scale- organi+ation and osts *) nalysis of process innovations and their effects on costs: a) new category: time#saving innovation ") /ottlenec0s c) Temporal coordination.
LITERATURE REVIEW
MEANING AND OBJECTIVES OF FUNDS FLOW STATEMENT: The "asic financial statement i.e.- the "alance sheet and profit and loss account (or) income statement of the "usiness- reveal the net effect of the various transaction on the operational and financial position of the assets and lia"ilities of an underta0ing at particular point of time. It reveals the financial status of the company.
The assets side of a "alance sheet shows of the deployment of resources of an underta0ing while the lia"ilities side indicates its o"ligation i.e.- the manner in which these resources were o"tained. The profit and loss account reflects the results of the "usiness operations for a period of time. It contains a summary expenses incurred and the revenue reali+ed in a accounting period. /oth these statement provide the essential "asis information on the financial activities of a "usiness. The "alance sheet give a static view of the resource(lia"ilities) of a "usiness and uses(assets) to which these resources have "een put at a certain point of time. It does not disclose the close for changes in the assets and lia"ilities "etween two different points of time.
The profit and loss account- in a general way- indicates the resources an underta0ing and which do not operate through profit and loss account. Thus another statement has to prepare to show the change in the assets and lia"ilities from the end of one period of time to the end of another period of time. The statement is called a statement of changes in financial position or a Funds Flow ,tatement.
The Funds Flow ,tatement is a statement which shows the movement of funds and is a report of the financial operations of the "usiness underta0ing. It indicates various means "y which funds were o"tained during a particular period and the way to which these funds were employed. In simple words- it is a statement of sources and applications of funds.
CONCEPT OF FLOW OF FUNDS: The term 1Flow2 means movement and includes "oth 1inflow2 and 1outflow2 the term 1flow of funds2 means transfer economic values from one asset e'uity to another flow funds is said to have ta0en place when any transaction of the transaction.
If the effect of transaction result in the increase of funds- it is called a source of funds and if it results in the decrease of funds- it is 0nown a s application of funds. Further- in case the transaction does not change funds. It is said to have not resulted in the flow of funds. ccording to the wor0ing capital concept of funds- the term 1flow of funds2 refers to the movement of funds in the wor0ing capital. If any transaction result in the increase in wor0ing capital it is said to "e a source or inflow of funds and it result in decrease of wor0ing capital- it is said to "e an application or out flow funds.
In simple language funds move when a transaction effectsv)
current assets and a fixed assets or-
vi)
fixed and a current lia"ility-
vii)
current asset and a fixed lia"ility-
viii)
fixed lia"ility and current lia"ility. nd funds do not move when the transaction effects fixed assets and fixed lia"ility or current assets and current lia"ilities.
3enneth midgley and 4onald &./urns define the term 1Funds2 as one used in the sense of spending power- it refers to the value em"edded in assets. ccording to /onneville and 5ewey 1Funds2 constitute the prime importance in sharing and operating any "usiness
enterprise. In ordinary parlance funds mean cash only- "ut it has got several different concepts as mentioned "elow. Funds may mean: •
•
ash only $et wor0ing capital i.e.- current assets less current lia"ilities.
•
Total resources and total funds.
•
Internal resources only.
•
$et worth i.e.- owner2s e'uity capital plus reserves.
CURRENT AND NON CURRENT ACCOUNTS To understand flow of funds it is essential to classify various accounts and "alance sheet items current and non 6 current categories. u rrent accounts can either current assets or current lia"ilities. urrent assets are those assets which in the ordinary course of "usiness can "e or will "e converted into cash with in a short period of normally one accounting year. urrent lia"ilities are those lia"ilities which are intended to "e paid in the ordinary course of "usiness with in a short period or nor mally one accounting year out of the current assets or the income of the "usiness. The f!!"#$% #& 'he !#&' f (urre$' r "r)#$% (*+#'*! *((u$'& 7ist of current or wor0ing capital
urrent 7ia"ilities
urrent ssets
' /ills paya"le
%. ash in hand
(' ,undry creditors or account paya"le
.ash at "an0
)' ccrued or outstanding expenses
*. /ills receiva"le
*' 5ividends paya"le
8.,undry de"tors or account receiva"le
+' /an0 overdraft
9.,hort term loans and advance
,' ,hort term loan advances and deposits
.Temporary or mar0eta"le investments
' Provision against current assets
?.Provision for taxation- if it does
;.Inventories or stoc0 such as
or0 in progress
?.prepaid expenses
amount to appropriation of profits @.Proposed dividends (may "e current
@.accurued income
non# current 7ia"ility)
L#&' f $$ , Curre$' r. Per/*$e$' C*+#'* A((u$'&:
$on# current or permanent lia"ilities
$on 6 current or permanent assets
%
%
&ood will
7and
*
/uilding
E'uity share capital
.
.
Preference share capital
.
. *
.
4edeema"le preference share capital
.
8
5e"entures
.
8
Plant and Aachinery
9
Furniture and Fittings
Trade Aar0s
;
Patent 4ights
?
7ong term investment
@
5e"it "alance of profit and
. 9
7ong term loan
.
.
,hare premium account
.
. ;
,hare forfeited account
.
. ?
.
Profit and loss account ("alance of profit i.e.- credit /alance)
@
.
apital reserve
.
.
loss account
%B.
apital redemption reserve
%B.
5iscount on issue of shares
%%.
Provision for depreciation gainst fixed assets
%%.
5iscount on issue of de"entures
Funds flow statement is the statement of sources and application of funds. It is also called as 1funds where got and where gone statement2 lmond oleman o"served. CThe funds statement in a statement summari+ing the signification financial changes which have occurred "etween the "eginning and the end of company2s accounting periodD. There *re 0 &'e+& #$v!v#$% #$ +re+*r*'#$ f fu$& f!" &'*'e/e$'
a.
scertain the funds from operation
".
Preparation of statement of changes.
c.
omputation of any missing figures as to profit or loss on ,ale of
d.
fixed assets and the amount of deprecation on fixed assets etc.-
e.
Finally preparation of funds flow statement. Fu!)e ef#$e& 'h#& &'*'e/e$' *&:
C statement of source and appreciation of funds in technical device designed to analysis the changes in the financial condition o f a "usiness enterprise "etween two datesD In the words of nthony the funds flow statement descri"es the sources from which additional funds were derived and the use to which these sources were put. F..>.. in glossary of management accounting terms defined funds flow statement as a statement either prospectus or prospectus setting out the sources and applications of the funds of an enterprise. The purpose of the statement is to indicate clearly the re'uirement of funds and how they are proposed to "e raised and the efficient utili+ation and application of the same. Thus funds statement in a statement which indicates various means "y which the funds have "een o"tained during a certain period and the >ays to which these funds have "een used during that period. The term funds used here means wor0ing capital i.e.- excess of current assets over current lia"ilities.
OBJECTIVES OF FUNDS FLOW STATEMENT: %) To analy+e the changes in assets and lia"ilities from the end of one period of the time to the end of another period of time. ) To 0now various needs for which funds were o"tained during a particular period "ased in which these funds were employed. *) To understand flow of funds in current or non current accounts. 8) To find out the sources form which additional funds were derived and the use to which their sources were put.
ADVANTAGES AND DISADVANTAGES OF FUNDS FLOW STATEMENT:
ADVANTAGES: %) elps in the evaluation of alternative finance and investments plan.
) Aanagements of various companies are a"le to review their "udget with the aid of fund flow statement. *) Investors are a"le to measure as to how the company has utili+ed the funds supplied "y them and its financial strengths with the aid of funds statement. 8) elps in the planning process of a company. 9) It is an effective tool in the allocation of resources. ) It explains the relationship "etween the changes in the wor0ing capital and net profits.
DISADVANTAGES: %) It should remem"er that a Fund Flow ,tatement is not a su"stitute of an income statement or a "alance sheet. ) It provides only some additional information as regards in wor0ing capital. s such it must "e remem"ered that funds flow statement is not a su"stitute of the income statement. *) It cannot reveal continuous changes. 8) It provides information a"out changes in the wor0ing capital only and ignores information a"out changes in cash- which are more relevant and important than wor0ing capital. 9) It is prepared ta0ing into consideration only funds items and non funds items are ignored. s such- it is complete and unscientific.
SOURCES OF FUNDS FOR FUNDS FLOW STATEMENT: >here an account of an accounting transaction- there is an increase in Fund (wor0ing capital) we say that there is an inflow or source of fund. There will "e an inflow- when- on account of transaction- there is •
decrease in the value of non# current asset. (or)
•
n increase in the value of non# current lia"ility.
The main sources of funds are: %) Funds from operations. ) Issue of e'uitypreference shares. *) 4aising long term loan. 8) ,ale of fixed asset. 9) ,ale of de"entures. ) $on trading receipts.
IMPORTANCE OF FUNDS FLOW STATEMENT: funds flow statement is an essential tool for the financial analysis and is of primary importance to the financial management. $ow 6 a 6 days- it is "eing widely used y the financial analysis- credit granting institutions and financial managers. The "asic purpose of a funds flow statement is to reveal the chang es in wor0ing capital on the two "alance sheets dates. It also descri"es the sources from which additional wor0ing capital has "een financial and the uses to which wor0ing capital has "een applied such a statement is particularly useful in assessing the growth of the firm its resulting financing theses needs. /y ma0ing use of proGected funds flow statement- the management can come to 0now the ade'uacy or inade'uacy wor0ing capital even in advance. !ne can plan the intermediate and long#term financial of the firm- repayment of long 6 term de"tsexpansion of the "usiness- allocation of resources- etc.- the significance or importance of a funds flow statement can "e were followed from its various uses given "elow:
1. I' he!+& #$ 'he *$*!y&#& f f#$*$(#*! +er*'#$&: The financial statements reveal the net effect of various transactions on the operational and financial position of a concern. the "alance sheet give a static view of the resources of a "usiness and the uses to which these resources have "een put at a certain point of time. /ut it does not disclose the causes for chang es in assets and lia"ilities "etween two different point of time. The funds flow statement explains causes for such changes and also the effect of these changes no the li'uidity position of the company.
,ometimes a concern may operate profita"ly and yet its cash position may "ecome more and more course. The funds flow statement give a clear answer to such a situation explaining what has happened to the profit of the firm.
2.
I' 'hr"& !#%h' $ /*$y +er+!e3#$% 4ue&'#$& f %e$er*! #$'ere&':
>hich otherwise may "e difficult to "e answered- such as: a) >hy were the net current assets lesser in spite of higher profits and vice 6 verse. ") >hy more dividends could not "e declared in spite of availa"le ProfitH c) ow was it possi"le to distri"ute more dividends than the present earningH d) >hat happened to the net profitH >here did they goH e) >hat happened to the proceeds of sale of fixed assets or issue of ,haresde"entures etc.
5.
I' he!+& #$ 'he fr/*'#$ f * re*!#&'#( #v#e$ +!#(y:
,ometimes a firm has sufficient profit availa"le for distri"ution as dividend "ut yet it may not "e advisa"le to distri"ute dividend for lac0 of li'uid or cash resources. In such causes- a funds flow statement helps in the formation of a realistic dividend policy.
0.
I' he!+& #$ 'he +r+er *!!(*'#$ f re&ur(e&:
The resources of a concern are always limited and it wor0s to ma0e the "est use of these resources. proGected funds flow statement constructed for the future help in ma0ing managerial decision. The firm can plan the deplo yment of its resources and allocate them among various applications.
6. I' *('& *& * fu'ure %u#e: proGect funds flow statement also acts as a guide for future to the management. The management can come to 0now the various pro"lems it is going to funds can "e proGected well in advance and also the timing of these needs. The firm can arrange to finance these needs more effectively and avoid future pro"lem.
7. I' he!+& #$ *++r*#&#$% 'he u&e f "r)#$% (*+#'*! funds flow statement helps in explaining how efficiently the management has used its wor0ing capital and also suggests way to improve wor0ing capital position of them firm.
8.I' he!+& )$"#$% 'he ver*!! (re#' "r'h#$e&& f * f#r/: The financial institutions and "an0s such as state financial institutions- industrial development corporation- industrial finance corporation of India- industrial development "an0 of India etc.- all as0 for funds flow statement constructed for a num"er of years
"efore granting loans to 0now the credit worthiness and paying capacity of the firm. ence- a firm see0ing financial assistance from these institutions has no alternative "ut to prepare funds flow statement.
APPLICATIONS OF FUNDS FOR FUNDS FLOW STATEMENT: >here an account of accounting transaction- there is a decrease in fund (wor0ing capital) we say that there is an outflow application of fund. There will an outflow- when- on account of the transaction- there is. •
decrease in the value of non#current lia"ility.
•
(or) n increase in the value of non#current asset.
The main applications of funds are: %) Funds used in operations# loss. ) Purchase of fixed assetsinvestment. *) 4edemption of preference shares. 8) 4edemption of de"entures. 9) 4epayment of long#term loans. ) $on#trading payments.
PREPARATION OF STATEMENT OF C9ANGES IN WORING CAPITAL The schedule of changes in wor0ing capital or the statement of changes in wor0ing capital is the statement which shows the changes in the wor0ing capital that have occurred during the current year. This schedule considers only current assets and current lia"ilities at the "eginning and at the end of the year. This schedule shows either increase or decrease in the wor0ing capital.
The following rules are followed while preparing a schedule of changes in wor0ing capitala) n increase in current assets results in increase in wor0ing capital. ") decrease in current assets results in decrease in wor0ing capital. c) n increase in current lia"ilities results in decrease in wor0ing capital. d) decrease in current lia"ilities results in increase in wor0ing capital.
STATEMENT OR SC9EDULE OF C9ANGES OF WORING CAPITAL: Particulars
Previous yr
urrent yr
Effect on wor0ing capital
Increase
5ecrease
Curre$' A&&e'&
a) ash in hand ") /ills receiva"le c) ,undry de"tors d) Temporary investments e) ,toc0sinventories f) Prepaid expenses g) ccrued income Total current assets
xxx
xxx
Curre$' L#*;#!#'#e&
a) /ills paya"le ") ,undry creditors c) /an0 overdraft d) ,hort term advances e) 5ividends paya"les f) Provision for taxation Total current lia"ilities Wr)#$% (*+#'*!
xxx
xxx
#7
$et increase or decrease in wor0ing capital Increase in wor0ing capital # 5ecrease in wor0ing capital
PREPARATION OF LEDGER ACCOUNTS FOR NON-CURRENT: N$-(urre$' r. +er/*$e$' L#*;#!#'#e&: %) E'uity share capital. ) Preference share capital. *) 4edeema"le preference share capital. 8) 5e"enture. 9) 7ong term loans. ) ,hare premium account. ;) ,hare forfeited account.
N$-(urre$' r. +er/*$e$' A&&e'&: %) &oodwill. ) 7and. *) /uilding. 8) Plant J Aachinery. 9) Furniture J Fittings. ) Trade Aar0s. ;) Patent 4ights.
PREPATION OF STATEMENT OF FUNDS FROM OPERATIONS: /efore ma0ing fund flow statement- we must ma0e statement showing the fund from operation. !peration means "usiness activity and fund from operation means profit from "usiness activity. ,o- you will easy understand that profit from "usiness activity "etween two accounting period must "e the source of fund.
STATEMENT OF FUNDS FROM OPERATIONS losing "alance of profit and loss account or retained earnings as given in the /alance sheet.
A $$-fu$ *$ $$ +er*'#$% #'e/& "h#(h h*ve ;ee$ *!re*y 5e"ited to profit and loss account
a) 5epreciation ") morti+ation of fictitious and intangi"le assets %. goodwill . patents *.
trade mar0s
8.
preliminary expenses
9.
discount on issue of shares
c) ppropriation of retained earning such as
Transfer to general reserve
5ividend e'uali+ation fund
Transfer to sin0ing fund
ontingency reserve etc
d) 7oss on sale of any non current or fixed assets such as
7oss on sale of land and "uilding 7oss on sale of machinery
7oss on sale of furniture 7oss on sale of long term investment
e) 5ividends including
Interim dividend
Proposed dividend
f) Provision for taxation (if it is not ta0en as current lia"ility) g) ny other non fund non operating items which have "een de"ited to P7 account Total ( )
xxxx
Le&& - N$ ,Fu$ r $$ +er*'#$% #'e/& "h#(h h*ve *!re*y ;ee$ (re#'e ' +rf#' *$ !&& *((u$' a)Profit or gain from the sale of non current fixed assets such as
Profit on sale of land and "uilding Profit on sale of plant and machinery Profit on sale of long term investment etc. ") ppreciation in the value of fixed assets such as increase in the value of land if it has "een credited to profit and loss account c) 5ividends received d) Excess provision retransferred to profit and loss account or written "ac0. e) ny other non operating item which has "een credited to profit and loss account f) !pening "alance of profit and loss account or retained earnings as given in the "alance sheet
Total ( /) Funds received from operation or "usiness activities Total ( ) 6 Total ( /).
xxxx
PREPARATION OF FUNDS FLOW STATEMENT Fu$ f!" &'*'e/e$'
A. Sur(e f fu$&
A/u$'
%) Fund from operation ("alance of second step) ) Issue of shares capital *) Issue of de"entures 8) 4aising of long term loans 9) 4eceipts from partly paid shares- called up ) mount received from sales of non current or fixed assets ;) $on trading receipts such as dividend received ?) ,ale of investments (7ong term) @) 5ecrease in wor0ing capital as per schedule of changes in wor0ing capital
Total
xxxx
A++!#(*'#$& r u&e& f fu$&
%) 4edemption of preference share capital ) 4edemption of de"entures *) 4epayment of long term loans 8) Purchase of long term loans 9) Purchase of long term investments ) $on trading payments ;) Payment of tax ?) Payment of dividends @) Increase in wor0ing capital (s per positive "alance of Ist step)
Total
xxxx
CHAPTER<% CO,PAN8 PROFILE
CO,PAN8 PROFILE
2i8d 9i8ks$ IT :4 9abs 1vt. 9td. is a software engineering services company in the business of providing Information technology based solutions to various business entities operating in different segments of the company. The 6ompany applies robust and optimal methodologiesH state of art technologies with software engineering skills to domain knowledge in creating information technology based solutions of clients in the respective domains. 2i8d 9i8k" IT :4 9abs keeps abreast with the state of art technologies. =nowledge of the technologies are carefully analyzed for suitability and appropriately deployed with the solution. The company has in;depth domain as well as functional knowledge. 2i8d 9i8k" IT :4 9abs helps public sector and commercial clients build their organizations by delivering measurable improvements every time. @hether through enhancing productivity, improving operational efficiencies or increasing revenue and growing profitability, 2i8d 9i8k" IT :4 9abs understands both the immediate and long;term goals that work for today$s organizations. 7ur proven experience and innovative solutions are designed for one purposeto give the edge. •
Technology "olutions
•
4ata 5ntry and 4ata 6onversion
•
usiness 6onsulting
•
2anagement"olutions
•
"trategic 4esign
•
7utsourcing
2i8d 9i8k" IT :4 9abs growth can be attributed to the companyFs focus on %uality, consistency, and long;term vision. In order to thrive in an interconnected economy, the service offerings by 2i8d 9i8k" IT :4 9abs meet the demands of
an ever;changing business environment. @e delivers fresh solutions with seasoned professional developers and consultants who have one singular focus0 5nsure that everything we do delivers value to our clients and moves their businesses forward giving them the edge in the demanding business.
7ISION @hen our clients think of 2i8d 9i8k" IT :4 9abs, we want them to envision a company that will give them the edge in their business needs through a combination of professionalism, cooperation, integrity, and excellence in performance with ob/ective results and high %uality. @e provide our customers with the highest levels of service, %uality, and efficiency. The enduring and personal relationships we hold with our clients, gives us the advantage of a loyal, well;established client and partnership base. @e offer the assurance that company needs will be met now and in the future.
,ISSION •
To be globally recognized as a provider of a trusted, reliable resource to %uality Information Technology (IT) solutions.
•
To build worldwide partnerships for success.
•
To give the clients a competitive edge.
•
To enhance the operational efficiency and financial advantage to clients.
Our Corporate Philosophy is Customization
JGive a solution which is an amalgamation of expertise and the client$s needs.K
7ALUES There are six driving factors behind our corporate philosophy, our day;to;day operations and ultimately our success. These values guide everything we do, shape who we are and how our customers, our associates, and our partners perceive us. •
CLIENTS>SUCCESS leads us to our success.
•
PEOPLE are our focus.
•
TEA,4OR? is the cornerstone of our culture.
•
INTEGRIT8 guides our work.
•
ACCOUNTABILIT8 is the foundation for everything we do.
•
CHANGE drives us to continue to evolve and grow.
BUSINESS INTELLIGENCE 2i8d 9i8k" IT :4 9abs usiness Intelligence solutions are designed to empower organization with information. In todayFs highly competitive and dynamic business environment, information is vital to survival. 7rganizations spend millions of dollars on business solutions that are designed to capture data, but little is done to transform this data into meaningful business information. ThatFs where 2i8d 9i8k" IT :4 9abs usiness Intelligence solutions come in.
BUSINESS CONSULTING The greatest accomplishments begin with an architect plan. @e believe that 2i8d 9i8k" IT :4 9abs is the advisor that the company needs most as you begin to conceptualize the business road map. 7ur business consulting is the cohesive mortar that unites our various disciplines. y focusing on companyFs strategic ob/ectives, we are able to design, develop,
and implement the solutions that will produce measurable change across the enterprise. &s the foundation of 2i8d 9i8k" IT :4 9abs, this business;centric philosophy permeates our various discipline leaders. @hether a developer or a designer, the goal of producing custom business solutions is paramount.
FOR,ING A STRUCTURE 7ur skill in analyzing companyFs internal structure enables 2i8d 9i8k" IT :4 9abs to enhance business processes, operational efficiencies and manage or reduce overall costs. y optimizing supply chain through supplier collaboration and rationalization we can improve the relationships that support business.
E@TENDING RELATIONSHIP y helping to orientate leadership direction and formulate operational practices, 2i8d 9i8k" IT :4 9abs can also effectively refine how company goes to market. y improving the ways in which the company deploy their sales force, manage traditional customer relationships and build an integrated marketing and communications plan, we can help the craft every touch point between the company and customers.
BRAND DE7ELOP,ENT The company brand is the company promise to the marketplace. It is the message, %uality, personality, and differentiation that make the organization or product uni%ue. It$s company image. 4eveloping a brand begins with an understanding of the product or company strengths, positioning within the marketplace, as well as consumer perception. 2i8d 9i8k" IT :4 9abs can help out to determine where the brand is and where it wants to be. Through competitive market analysis, we will expose company brand$s key differentiators and recognize marketplace opportunities.
@e conduct in%uisitive exercises to formulate the language, personality, and tone of the organization. &nd by analyzing business ob/ectives, we are able to build a strategic communication plan that assists in taking company brand to market. 2i8d 9i8k" IT :4 9abs experienced consultants will help out visually and verbally to express company brand$s identity. 6ompany 9ogo, trademarks, and taglines will be designed or redesigned to convey company brand with razor; sharp precision. The company identity will also speak through color, text and photography. 2i8d 9i8k" IT :4 9abs will provide an identity design system that ensures consistency while empowering entire organization with that entire company brand has to offer. "ome organizations already have an established brand presence but are in need of brand translation as they migrate across various media. y understanding the strengths, personality, and consumer perceptions of the company brandas well as identity standardswe are able to effectively translate the company brand and identity across multiple mediums. In the end, 2i8d 9i8k" IT :4 9abs will help out forge the blueprint for implementing the company brand and identity across various media and differentiate it in competitive marketplaces.
ENTERPRISE APPLICATION INTEGRATION 2i8d 9i8k" IT :4 9abs development team is designed to partner with our clients to address many business critical issues and ob/ectives. 2i8d 9i8k" IT :4 9abs knows how to use state;of;the;art technologies to provide targeted, world;class integration solutions that address uni%ue business needs.
INTEGRATED ,AR?ETING "uccessful Integrated 2arketing solutions take three key elements in order to produce value0 solid strategy, %uality design, and measurability. Integrated 2arketing utilizes a variety of media and channels. It employs designers that understand these mediums and can translate their designs into
effective communications. 2i8d 9i8k" IT :4 9abs designers have the expertise to match visual design with the appropriate language and elements, essential in improving response rates and reaching near to intended audience.
STRATEGIC PLANNING SOLUTIONS 2i8d 9i8k" IT :4 9abs "trategic solutions leverage a proven methodology to help our clients fundamentally align and leverage technology in order to achieve enterprise business ob/ectives. @e devise these strategies by examining the current infrastructure, IT organization, business processes, organizational ob/ectives, and key stakeholders. Then we align technology solutions in a way that ties these stakeholders to the business systems and processes within the organization. 7ur strategic planning solutions are holistic to provide maximum value.
Strateic P-annin Ser(ice Feature)5 •
&ligns technology infrastructure and initiatives with high;priority business processes and organizationalob/ectives
•
!ocuses on the needs of the key stakeholders (customers, suppliers, employees) and not on the limitations of technology.
•
1rovides %ualitative and %uantitative measures of the success of the strategy or business continuity plan.
•
6reates alignment, consensus, and accountability for the prioritized initiatives among executive leadership and line of business management.
SER7ICES 2i8d 9i8k" IT :4 9abs delivers wide;ranging and value added services adopting the uni%ue approach of integrating people, processes and technology.
This approach has allowed our teams to map business re%uirements to the technology solution that fit pro/ect goals. 7ur consultants focus on understanding customer needs to devise design and development strategies to efficiently create reliable applications, on time and within budget. 7ur expertise at strategic, technical, operational and organizational levels help organizations takes advantage of new business opportunities. Stud$ and Ana-$)i) 0 7nce the problem Ticket issue is received, the 7nsite technical team makes
a careful study of the issue and analyzes its complexity. E)tiation5 &fter a thorough analysis the work estimation is made and it is placed before the client
through an offsite support 2anager. ased on the estimated time and priority, the issue is then scheduled to be resolved either by the onsite team or by the offshore team. Sc#edu-in5 Identify the best suitable team member(s) for solving the issue and assign the tasks to
that particular resource(s). So-ution5 The assigned team member(s) provides the solution as specified in the given task
document in a scheduled time adhering to the %uality standards, he also provides a standard document describing the work done. Te)tin 0 Test the changed code as per the 2aintenance 2anual.
re%uired Lo ,aintenance5 9ogs will be maintained for future use by the offsite as well as offshore team for
all the support issues that have come up.
APPLICATION DE7ELOP,ENT @ith increasing demands, enterprises worldwide are finding it difficult to implement, and support new applications, while at the same time, maintaining and upgrading their existing systems. To overcome the situation, companies must seek to expand development capacity, accelerate time;to;market, and build flexible distributed delivery models to negotiate risk.
There are benefits in building software to improve existing business processes rather than changing proven procedures in order of work within the constraints of off;the;shelf applications. 2i8d 9i8k" IT :4 9abs addresses these issues and will help you to remain in step with and ahead of your competition by continuously improving your information technology;based business solutions. @e remain focused on developing the best solution to respond to each clientFs individual business needs. Through our advanced consultative approach, 2i8d 9i8k" IT :4 9abs assists in clearly defining organizational goals and determining where the current systems meet these goals, where they fail, and how they can be improved through our custom applications solutions. 7ur experienced team will work on the pro/ect from its conceptualization through and beyond its completion and implementation. 7ur focus areas include extranet, intranet, business;to;business, e;commerce solutions, software, database and other industry applications. 7ur "ervices in these areas are focused on0 •
&pplication 4evelopment ; This includes web based, clientLserver application development and enhancements to legacy applications
•
2igration and 6ustomization ; This includes version
•
Implementation "upport ; outine 2aintenance and !unctional 5nhancements
•
4evelopment and Testing ; 6omponent 4evelopment and
•
5fficient 4ata 5ntry and 4ata 6onversion with 'EEB percent %uality.
APPLICATION ,AINTAINENCE 2i8d 9i8k" IT :4 9abs provides comprehensive software application maintenance services for medium to large enterprises. "ervices range from
undertaking maintenance of existing applications to adding new functionality. 4eep experience in understanding and maintaining large applications coupled with an expertise in new technologies help to not only prolong the life of existing applications but also infuse fresh blood into the system. & team of dedicated software engineers are available round the clock both onsite and offsite to handle all maintenance related issues from defect fixing to adding new products and functionality. &pplication maintenance deals with •
1romptly fixing software problems that cause the system to be non;operative or to perform incorrectly
•
Implementing changes, improvements, and enhancements to the system.
BUSINESS PROCESS OUTSOURCING usiness 1rocess 7utsourcing (17) has changed the way the world does business, and this trend is only likely to accelerate. 17 is %uickly emerging as a key enabler of all high performing organizations. 2ore and more businesses and governmental leaders;cross industry, organizational size and geography are turning to 17 to help them elevate their organizations performance. Through the right mix of business process improvement, labor arbitrage and technology enhancements, 17 is aimed at reducing cost, increasing service levels and thus improving the enterprise value of the business processes. lending %ualified workforce and faster adoption of well;defined business processes leads to higher productivity gains without compromising on %uality. The availability of cost effective skilled resources ; that is well educated and able to converse in 5nglish, well;developed communication infrastructure and software sector as well as an appropriate time difference with other countries, help in making India a favorite destination for the 17 industry.
INTERACTION 2i8d 9i8k" IT :4 9abs has rich experience experience in successfully successfully executing executing large IT outsourcing outsourcing pro/ects with well;establ well;established ished Infrastructure. Infrastructure. 2i8d 9i8k" IT :4 9abs Interactions, 9abs Interactions, the 17 arm of 2i8d 9i8k" IT :4 9abs &ims 9abs &ims about reducing the operational costs for its 6lients by improving the outsourced processes and increasing increasing their productivity productivity.. The strong parentage of 2i8d 9i8k" IT :4 9abs provides the right mix of Infrastructure, 1eople and 1rocesses to the clients. The partnership offers technical expertise coupled with global call center expertise. To keep pace with todayFs economic environment, organizations need to focus on their core competence. The easiest way of doing this is to partner with a service prov provid ider er like like 2i 2i8d 8d 9i 9i8k 8k" " IT : :4 4 9a 9abs bs Interac Interactio tions, ns, who underst understand ands s the company business and solves non;core, yet critical business processes. 2i8d 9i8k" IT :4 9abs Interactions interest lies in a long;term partnership addressing all aspects of the outsourcing re%uirements from clients. 2i8d 9i8k" IT :4 9abs Interactions gives the very best in bringing cost efficiency with %uality processes, round;the;clock operations, state;of;the;art infrastructure and a committed people force. It offers Industry;specific services to customers. !or inst instan ance ce,, in the the Insu Insura ranc nce e and and Meal Mealth thca care re sect sector or,, it addr addres esse ses s 6lai 6laims ms 1rocessing, 1olicy Issuance, 1remium &ccounting, etc. It also offers !ront 7ffice services like 6ontact 6enters for 6ustomer "ervice. It provides 1roduct "upport : Technical Melp 4esk services as well as ack;7ffice 1rocesses in the areas of &ccounting, M and other Transaction Transaction Intensive activities.
CALL CENTER SER7ICES 7ur focus has been to continually find new and better ways to help our clients make profitable connections with their customers. @hether you need messaging or answering service, inbound call center services, outbound call center services,
email support and online chat, we can help out to make the most of every contact.
,EDICAL TRANSCRIPTION TR ANSCRIPTION 2i8d 9i8k" IT :4 9abs 1vt. 9td. is a trailblazing 2edical Transcription 6ompany. 2i8d 9i8k" IT :4 9abs has 9abs has pioneered its medical transcription operations by recruiting young graduates with background in of various sub/ects and orienting them by by imparting to them six months of comprehensivetraining. 2i8d 9i8k" IT :4 9abs has a handpicked and individually trained specialized team of personnel who deal with multiple branches of medicine including the following0
6ardiology 1ulmonologists Gastroenterology Genitourinary 7bstetrics and Gynecology 7rthopedics 7ncology and adiology 1sychiatry 58 58T 8eurology The growth of 2i8d 9i8k" IT :4 9abs in this field is a saga of success, for it has always endeavored to provide %uality transcription services. &t present it has more than E 2edical Transcribers bers with an average of ' months experience in transcription of a variety of medical reports involving 6linical 8otes Mistory and 1hysical 6onsultation 7perative eports 4ischarge "ummaries
2i8d 9i8k" IT :4 9abs offers 9abs offers Nuality Transcription "ervices with Turn;&round "chedules that match the best in the industry. 2i8d 9i8k" IT :4 9abs creates 9abs creates a congenial work atmosphere and provides and sustains ample resources to its personnel. In addition, all our 2edical Transcribers have &ppropriate education Training 5xperience @ork experience under supervision of a skilled management team 2i8d 9i8k" IT :4 9abs has its own in;house, fully e%uipped facility to train E 2edical Transcribers at a time. Training at 2i8d 9i8k" IT :4 9abs facilitates individuals in the effort to attain international standards in delivering work within stipulated time.
LEADERSHIP LEADERSHIP TEA, The varied and successful business careers of the principals at 2i8d 9i8k" IT :4 9abs 9abs,, comb combin ined ed with with seaso seasone ned d seni senior or manag managem ement ent with with decad decades es of experience, have given the company an unprecedented wealth of resources uni%ue to the con. con.
CHAPTER<* DATA ANAL8SIS AND INTERPERTATION
DATA ANAL8SIS AND INTERPRETATION PROCEDURE FOR PREPARING FUNDS FLO4 STATE,ENT5 !unds flow statement is a method by which are study changes in financial position of a business enterprise between beginnings and ending financial statement dates. Mence, the funds flow statement is prepared by comparing two balance sheets and with the help of such other information derived from the accounts as may be needed. roadly speaking the preparation of funds flow statement consists of two parts. '. "tatement of schedule of changes in working capital . "tatement of sources and application of funds.
STATE,ENT OF CHANGES IN 4OR?ING CAPITAL5 This is prepared by taking 7893 the J6urrent &ssetsK "6M54<95 reveals the Increase (or) 4ecrease in J@orking 6apitalK between the two alance "heets of the usiness (i.e.) it takes into account only the 6M&8G5" in the #6urrent &ssets$ and #6urrent liabilities$.
RULES FOR SCHEDULES 0 (I21&6T on @orking 6apital)
Increa)e in @orking 6apital Increa)e in 6urrent &ssets Decrea)e in @orking 6apital Decrea)e in 6urrent &ssets Increa)e in 6urrent 9iabilities Decrea)e in @orking 6apital Decrea)e in 6urrent 9iabilities Increa)e in @orking 6apital
PROFOR,A< SCHEDULE OF CHANGES IN 4OR?ING CAPITAL5
1articulars
7penin g
closin g
6hanges in @.6
xxx xxx xxx xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx xxx xxx xxx
If JI865&"5 in 6& take in increases column
xxx xxx xxx xxx xxx xxx xxx xxx
xxx xxx xxx xxx xxx xxx xxx xxx
If I865&"5 in 69 take in decrease column
A. Current A))et)
') ) ) *) +) ) -) A)
6ash in MandL ank 2arketable Investments "undry 4ebtors ills eceivable &dvances (Given) &ccrued Incomes 1re;paid 5xpenses 6losing Inventory ("tock)
If 4565&"5 in 6& take in decreases column
B. Current LIABILITIES
') ) ) *) +) ) -) A)
"undry 6reditors ills 1ayable 7ut "tanding 5xpenses "hort Term 9oans ank 7verdraft 1rovision for doubtful debts 1rovision for Tax(efer 8ote) 1roposed 4ividends(efer 8ote)
If 4565&"5 in 69 take in increase column
TOTAL IncreaseL 4ecrease in @.6
xxxx
xxxx
C. NET IncreaseL 4ecrease in
xxx
xxx
xxxx
xxxx
@.6(alancing !igure)
FUNDS FLO4 STATE,ENT5 In the !!", all the J8on;6urrent &ssetsK : J8on;6urrent 9iabilitiesK should be taken from the 7158I8G : 697"I8G alance "heet (Given). The !!" shows the "7<65" : the &119I6&TI78" of funds during the last accounting year. The !!" can be prepared in two ways; i.e., either in the "T&T5258T or &667<8T form. RULES FOR FFS5
Increase in J8on; 6urrent &ssetsK !unds.
is an &119I6&TI78 of
4ecrease in J8on; 6urrent &ssetsK
is a "7<65 of !unds.
Increase in J8on; 6urrent 9iabilitiesK
is a "7<65 of !unds.
4ecrease in J8on; 6urrent 9iabilitiesK !unds.
is an &119I6&TI78 of
STATE,ENT OF SOURCES AND APPLICATIONS OF FUNDS5
JSOURCES
&mt
J&119I6&TI78"K
&mt
') !unds !rom 7peration(!!7) ) Issue of 5%.L 1ref.sh.capital
xxx
') !unds 9ost in 7peration(!97) ) edemption of 1ref.sh.capital ) edemption of 4ebentures *) 1urchase of !ixed &ssets +) 1urchase of long term investments ) epayment of 9LT loans -) 1ayment of Taxes A) 1ayment of 4ividends D) Increase in @.6
xxx
xxx ) Issue of 4ebentures xxx *) "ale of !ixed &ssets +) "ale of long term investments ) aising of 9LT loans -) efund of Taxes A) 8on;7perating Incomes D) 4ecrease in @.6
xxx xxx xxx xxx xxx xxx
xxxx
xxx xxx xxx xxx xxx xxx xxx xxx
Oxxx
CHANGES IN 4OR?ING CAPITAL POSITION OF ,INDLIN?S IT RD LABS P7T LTD "or t#e $ear 2:= 2 Ru!ee) In La#)9 Particu-ar)
Pre(iou) $ear 2:
Current $ear 2
4orin ca!itaIncrea)e
Decrea)e
A9 Current A))et)
')Inventories ) 4ebtors )@ork in progress *)6ash and bank +)9oans and advances )7ther current assets &) Total 6urrent &ssets B9 Current Lia&i-itie)
') 6reditors ) 6ash credit )1roposed dividend *) 7ther liabilities +) 1rovision tax ) 4ividend
-D.*
*-D+.-D
'EE.'+
;;;;
+'.';;;; *'A.+D
A'.' ;;;; *D.
'-.D+ ;;;; E.-*
;;;; ;;;; ;;;;
AD.DD
-A+.*
;;;;
+*.+
.+A
-.E
*.*+
;;;;
++:/.0
/:0:./1
-.A ;;;; *.+ D.A '*.;;;;
;;;; '.D' ;;;; ;;;; ;;;; '.'+
'-A'.DA *.' *.D ''-'.A+ E-.+ '.--
'-+*.' .E* D.''.''D.DA .D
%2%.
%1*0.*
+.E-
-E.-
Total 6urrent 9iabilities 8et working capital (&;
)Increase L 4ecrease '-*.E in @.6
;;;;
T7T&9
%0%./0
%0%./0
FUNDS FLO4 STATE,ENT FOR THE 8EAR 2:<2
'-*.E
1*%2.%1
1*%2.%1
SOURCES
OF
A,OUNT
FUNDS
APPLICATION
OF
A,OUNT
FUNDS
') Issue of share
;;;;
capital
')eduction
of ;;;;
share capital
)Issueof
;;;;
4ebenture )aising
)eduction
of ;;;;
4ebenture of
new
)epayment
loans 0;
''*D.+-
9oans0;
;;;;
P "ecured loans
'.E
P "ecured loans
;;;;
P
;;;;
P
*-.*
*)"ale
of
!ixed
&ssets
*)1urchased
of
+-D.E
!ixed &ssets
;;;;
+)1urchase
;;;;
Investments
;;;;
) 4ecrease in @.6
)9ossfrom
'-*.E
-)4ecrease
7peration
**.'
+)1rofit
from
7peration in
Investment
;;;; of
-) Increase in @.6 A)1ayment
of
4ividend
T7T&9
INTERPRETATION5
1:.0
1:.0
The funds flow statement of EEA;ED clearly shows that the company$s working capital has increased by s '-*.E lakhs. The sources of the company were achieved from the following. '. !unds from operation. +-D.E lakhs. . !rom secured loans.
''*D.+- lakhs.
. !rom un;secured loans. '.E lakhs.
The company spent its sources for the following purposes
'. The company used funds worth s +-D.E lakhs for ac%uisition of fixed assets. . !or payment of dividend s **.' lakhs. Thus, the company depended on secured and un;secured loans in addition to funds from operation for ac%uisition of fixed assets and meeting working capital re%uirement.
CHANGES IN 4OR?ING CAPITAL POSITION OF ,INDLIN?S IT RD LABS P7T LTD "or t#e $ear 2= 21 Ru!ee) In La#)9 Particu-ar)
Pre(iou) $ear
Current $ear
2
21
4orin ca!ita-
Increa)e
Decrea)e
A9 Current A))et)
')Inventories
*-D+.-D
E-.+
'+''.+
;;;;
)@ork in progress
A'.'
+E'.E
;;;;
D.A
*)6ash and bank
;;;;
;;;;
;;;;
;;;;
+)9oansand
*D.
**'.'E
'.--
;;;;
)7thercurrent
-A+.*
AD.--
A*.*
;;;;
assets
-.E
'-.-
;;;;
D.
/:0:./1
:1%/.:
*) 7ther liabilities
'-+*.'
'+A-.'
'.A+
;;;;
+) 1rovision tax
.E*
+'.E'
;;;;
*.D-
) 4ividend
D.-
E.EE
D.-
;;;;
''.'-
'''.D
'D.*
;;;;
Total 6urrent
'D.DA
E.+
'D.
;;;;
9iabilities
.D
.*-
;;;;
E.++
%1*0.*
2:+.%0
) 4ebtors
advances
&)Total6urrent &ssets B9 Current Lia&i-itie)
') 6reditors ) 6ash credit )1roposed dividend
8et working capital (&;
)IncreaseL4ecreas e in @.6 -E.T7T&9
+'+'.+
'*E.A+
+1+1.+2
'*E.A+
+1+1.+2
1:+.:+
1:+.:+
FUNDS FLO4 STATE,ENT FOR THE 8EAR 2<21 SOURCES
OF
A,OUNT
FUNDS
APPLICATION
OF
A,OUNT
FUNDS
')Issue
of
share ;;;;
')eduction
capital
of ;;;;
share capital
)Issueof
;;;;
)eductionof
4ebenture
4ebenture
) aising of new
)epayment
;;;;
loans 0;
'*DD.E*
9oans0;
;;;;
P "ecured loans
;;;;
P "ecured loans
'.'
P
;;;;
P
A.A-
*)"ale
of
!ixed '.+
*)1urchased
&ssets
of
!ixed &ssets
;;;;
+)1rofitfrom
;;;;
+)1urchaseof
7peration
;;;;
Investments
;;;;
) 4ecrease in @.6
)9ossfrom
'*E.A+
-)4ecreasein
7peration
D.-
Investment
-) Increase in @.6 A)1ayment
of
4ividend
T7T&9
10/./
10/./
INTERPRETATION5
The funds flow statement of EED;E'E clearly shows that the company$s working capital has increased by s '*E.A+ lakhs. The sources of the company were achieved from the following. '. !unds from operation. '.+ lakhs. . !rom secured loans.
'*DD.E* lakhs.
The company spent its sources for the following purposes. '
The company used funds worth s A.A- lakhs for ac%uisition of fixed assets.
!or re;payment of unsecured loans '.' lakhs.
!or payment of dividend including dividend tax s D.- lakhs.
In addition to the funds generated from operation the company ac%uired secured loans for ac%uisition of fixed assets, repaying un;secured loans and meeting the increased need of working capital. The management also proposed payment of dividend of s .+E per e%uity share, which let an out flow of funds of s D.- lakhs including dividend tax.
CHANGES IN 4OR?ING CPITAL POSITION OF ,INDLIN?S IT RD LABS P7T LTD "or t#e $ear 21 = 211 R). La#)9 Particu-ar)
Pre(iou) $ear
Current $ear
4orin ca!ita-
Particu-ar)
2 Pre(iou) $ear
21 Current $ear
4orin ca!ita-
2
21 Increa)e
Decrea) e
A9 Current A))et)
')Inventories
E-.+
D.E
;;;;
*'.
) 4ebtors
+E'.E
A.D
+.ED
;;;;
)@ork in progress
;;;;
;;;;
;;;;
;;;;
*)6ash and bank
**'.'E
A'.-'
DE.'
;;;;
+)9oansand
AD.--
'ED.'
-D.+*
;;;;
advances
'-.-
.+
A.DA
;;;;
:1%/.:
02/.0
)7thercurrent assets
&) Total 6urrent &ssets
B9 Current
'+A-.D
*E-.+
;;;;
'AE.*
Lia&i-itie)
+'.E'
'*.DA
'E*.E
;;;;
') 6reditors
E.EE
.A*
;;;;
.A*
)1roposed
'''.D
'*E.-
;;;;
'-.-D
4ividend
E.+
E.+
;;;;
'A.E
*)7ther liabilities
.*-
'.+
;;;;
;;;;
2:+.%0
+*1.%0
+'+'.+
A.*
D.'E
;;;;
;;;;
D.'E
+1+1.+2
+1+1.+2
*+1.%+
*+1.%+
)6ash credit
+)1rovision tax )4ividend
Total 6urrent 9iabilities 8et working capital (&;) IncreaseL4ecrease in @.6
T7T&9
FUNDS FLO4 STATE,ENT FOR THE 8EAR 21<211 Source) o" "und)
Aount
A!!-ication o" "und)
Aount
') Issue of share capital
;;;;
') eduction of share capital
;;;;
) Issue of debenture
;;;;
) eduction of debenture
;;;;
) aising of new loans0;
) epayment loans0 ;
P "ecured loans
;;;;
P "ecured loans
'E+.'
P
.+
P
;;;;
*) "ale of fixed assets
;;;;
*) 1urchase of fixed assets
EEE.EE
+) 1rofit from operation
''A.-A
+) 1urchase of investment
;;;;
) 4ecrease in @.6
D.'E
) 9oss from operation
;;;;
-) 4ecrease in investment
'.EE
-)Increase in @.6
;;;;
A)1ayment of dividend
E.EE
T7T&9
%/+.1%
%/+.1%
INTERPRETATION5
The funds flow statement of E'E;E'' clearly shows that, working capital decreased by s D.'E lakhs. The sources of the company were achieved from the following. '. !unds from operation. ''A.-A lakhs. . !rom un;secured loans. .+ lakhs. . !rom sale of investments. '.EE lakhs. *. !rom working capital.
D.'E lakhs
The company spent its sources for the following purposes. '. The company used funds worth s EEE lakhs for ac%uisition of fixed assets.
. !or re;payment of secured loans s 'E+.' lakhs. . !or payment of dividend s E.EE lakhs. Thus, inade%uate long;term funds to finance purchase of plant and machinery, re; payment of secured loans deteriorated working capital position. also the management proposed payment of a dividend of s .+E per e%uity share for the year E'E;E'' to absorb s E.EE lakhs. "o li%uidity deterioration in E'E;E'' was due to, 4eployment of working capital in long term investment and epayment of secured loans.
CHAPTER < + CONCLUSION SUGGESTIONS
CONCLUSION
The 2i8d 9i8ks$ IT :4 1vt 9td. 8et @orking 6apital is satisfactory between the years since it shows increase trends, but after that it is in declining position. The company had taken "ecured 9oans in the assessment year E'E;E''. The company has repayment total
5%uipment re%uired for profits under construction but not installed by end of year is shown under 6apital work in progress. 4epreciation is calculated from year to year. Investments is carried at cost less provisions where ever necessary.
The purchase of fixed assets by the company is up to mark. The company not raising additional capital share is same. etter awareness to increase the sale is suggested. 6ost cut down mechanics can be employed and better techni%ues can be employed.
SUGGESTIONS
') 2ost of the years the company is having increase in working capitalH this is due to increase in levels of current assets. This is due to increase in level of current assets. ringing the level of current assets can reduce this increase in working capital. ) 9oans and advances are fluctuating in a disorder. This may be due to disorder of current assets and current liabilities. ) 5very company should have upper : lower limits which produce reasonable combination of profitability in management of working capital. *) The company should not maintain the resources surplus 6urrent &ssets : 6urrent 9iabilities. This is not good for the company so maintain the reserves : supply, increase the 6urrent &ssets : 6urrent 9iabilities is healthy for the organization. +) !unds flow statement has shown twice losses from operations these are mainly due to heavy increase in current liabilities like creditors and other liabilities. To avoid this in the coming years it can be suggested to reduce the level of credit to supplier of raw materials. I.e. to purchase the raw material from those suppliers who give them at low costs. -) 6ash balances are not maintained properly. They have to be maintained to meet the day;to;day operations with out fail. A) To improve the financial health of the company : maximizing
CHAPTER = / BIBLIOGRAPH8
BIBLIOGRAPH8
BOO?S5 !inance 2anagement by 9.2 1andey 2anagement &ccounting by ".1 Guptha !undamentals of !inancial 2anagement by ".8 2aheshwari
