B Com Exam > B Com Notes > Financial Analysis and Reporting > Statement of Changes in Working Capital - Fund Flow Analysis, Financial Analysis and Reporting
Statement of Changes in Working Capital - Fund Flow Analysis, Financial Analysis and Reporting | Financial Analysis and Reporting - B Com PDF Download
Schedule/Statement of changes in working capital
The information relating to the changes in current natured accounts between two periods of time presented in the form of a statement is what we call the schedule/statement of changes in working capital.
Preparing the Schedule/Statement of changes in working capital
Preparing the schedule/statement of changes in working capital requires us to present the information relating to the current area of the balance sheets pertaining to the two periods in the format given below and deriving and presenting the changes within them.
Schedule/Statement of Changes in Working Capital for the period from __ to __
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Particulars/Account |
Balance as on 31st March |
Working Capital Change |
||
|---|---|---|---|---|
|
2007 |
2008 |
Increase |
Decrease |
|
|
a) CURRENT ASSETS 1) Cash Balance |
|
|
|
|
|
TOTAL |
28,18,000 |
36,12,000 |
8,34,000 |
40,000 |
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b) CURRENT LIABILITIES 1) Sundry Creditors |
|
|
|
|
|
TOTAL |
18,18,000 |
24,12,000 |
60,000 |
6,72,000 |
|
Working Capital [(a) - (b)] |
10,00,000 |
12,00,000 |
|
|
|
TOTAL |
8,94,000 |
6,94,000 |
||
| Net Change in Working Capita |
12,00,000 |
|||
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Identify all the Current natured accounts on the assets as well as the liabilities sides of the two balance sheets in consideration.
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Fill the statement with the data relating to those accounts, taking current assets as a group and current liabilities as another group.
A balance sheet item may have data in only one of the balance sheets or in both. Each item should appear only once in the statement.
The document Statement of Changes in Working Capital - Fund Flow Analysis, Financial Analysis and Reporting | Financial Analysis and Reporting - B Com is a part of the B Com Course Financial Analysis and Reporting.
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FAQs on Statement of Changes in Working Capital - Fund Flow Analysis, Financial Analysis and Reporting - Financial Analysis and Reporting - B Com
| 1. What is a statement of changes in working capital? |  |
Ans. A statement of changes in working capital is a financial statement that shows the changes in a company's current assets and current liabilities over a specific period of time. It provides information about the company's ability to manage its short-term obligations and indicates whether the company's working capital position has improved or deteriorated.
| 2. How is a fund flow analysis related to the statement of changes in working capital? | |
Ans. Fund flow analysis is closely related to the statement of changes in working capital as it helps in understanding the sources and uses of funds within an organization. The statement of changes in working capital provides information about the changes in current assets and current liabilities, which are crucial components of the fund flow statement. By analyzing the statement of changes in working capital, one can identify the reasons behind the changes in funds and assess the financial health of the company.
| 3. How can the statement of changes in working capital be used for financial analysis? | |
Ans. The statement of changes in working capital can be used for financial analysis in several ways. It helps in evaluating the liquidity position of a company by analyzing the changes in current assets and current liabilities. It also provides insights into the company's operational efficiency and working capital management. Additionally, by comparing the statement of changes in working capital over different periods, one can identify trends and patterns that may indicate potential financial issues or opportunities.
| 4. What are some key components of the statement of changes in working capital? | |
Ans. The statement of changes in working capital typically includes various components such as changes in accounts receivable, inventory, accounts payable, prepaid expenses, and accrued liabilities. These components represent the key elements of a company's working capital and their changes reflect the company's ability to efficiently manage its short-term assets and liabilities.
| 5. How does the statement of changes in working capital contribute to financial reporting? | |
Ans. The statement of changes in working capital contributes to financial reporting by providing important information about a company's working capital position and its changes over time. This information is crucial for stakeholders, including investors, lenders, and management, as it helps them assess the company's short-term liquidity and financial health. The statement of changes in working capital is also an integral part of the overall financial statements, providing a comprehensive view of the company's financial performance and position.
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Dec 22, 2024 Last updated |
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