Funds Flow

Funds Flow
Statement Analysis
Moxie IT India Pvt Ltd.
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Funds Flow
Statement Analysis
Contents
INTRODUCTION............................................................................................................4
FUNCTIONS OF FINANCIAL MANAGEMENT..........................................................5
MEANING OF FUNDS................................................................................................6
Fund:................................................................................................................................6
Meaning of Flow of Funds............................................................................................6
OBJECTIVE OF STUDY.............................................................................................7
NEED FOR STUDY.........................................................................................................7
SCOPE OF THE STUDY.................................................................................................8
RESEARCH METHODOLOGY......................................................................................8
Research Design................................................................................................................8
Period of study:.................................................................................................................9
LIMITATIONS..................................................................................................................9
PARTIES INTERESTED IN FINANCIAL ANALYSIS................................................11
Internal Users..............................................................................................................11
External Users.............................................................................................................12
Significance of Financial Analysis..................................................................................13
Significance of Funds Flow Statement.......................................................................13
Types of analysis.............................................................................................................18
Methods of Analysis........................................................................................................20
Comparative Statement Analysis....................................................................................20
Common-size Statement Analysis..................................................................................20
Users of Financial Analysis.............................................................................................23
Management:.................................................................................................................24
Funds Flow Analysis.......................................................................................................24
MEANING AND CONCEPT OF FUNDS..................................................................25
Fund:..............................................................................................................................25
LIMITATIONS OF FUNDS FLOW STATEMENT..................................................29
PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT.....................38
IT INDUSTRY IN INDIA.............................................................................................46
IT INDUSTRY IN ANDHRA PRADESH...................................................................47
Capacity, Performance and Road Ahead.........................................................................48
Overview of the performance of the IT Sector...............................................................52
SWOT Analysis...............................................................................................................57
SWOT ANALYSIS OF IT INDUSTRY......................................................................57
HR Challenges.........................................................................................................58
Major Software Companies............................................................................................60
Services...........................................................................................................................62
SALIENT FEATURES OF Moxie IT:............................................................................64
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Statement Analysis
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INTRODUCTION
A funds flow statement is a technical device designed to analyze, the
changes in the financial condition of a business enterprise between two years. It is also
called as a statement of sources and applications of funds. The funds flow statement is
becoming popular with the management because it not only helps them in analyzing
financial operations, providing basis for comparison with budgets, and serving as a tool
of communication, but also explains the financial consequences of such operations such
as the reason why the company is experiencing difficulty in making payments to
creditors or why the bank balance is getting thinner.
There is a general recognition in industry and business and among

professional accounting bodies that financial statements should provide relevant
information which sub serves the multiple objectives of shareholders, investors,
creditors, customers and the public and which enable them to arrive at rational
economic decisions. Normally what the shareholders look for in these statements is an
account of the stewardship of the firm and the amount which may be expected as
dividend. Potential investors look upon funds flow statements as the source of there
realistic view of the value of a companys shares in terms of an expected futures stream
of distribution and judge the efficiency of the management accordingly.
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FUNCTIONS OF FINANCIAL MANAGEMENT

The financial functions can be divided into four broad categories:
1. Investment decisions.
2. Financing decisions.
3. Dividend decisions.
4. Liquidity decisions.
1. Investment decision
Investment decision or capital budgeting involves the decision of allocation of
capital or commitment of funds to long-term assets, which would yield, benefits in
future. Its one very significant aspect is the task of measuring the prospective
profitability of new investments. Future benefits are difficult to measure and cannot be
predicted with certainty.
2. Financing decision:
Financing decision is the second important function to be performed by the
financial manager. Broadly, he must decide when, where and how to acquire funds to
meet the firms investment needs. The central issue before him is to determine the
proportion of equity and debt. The mix of debt and equity is known as the firms capital
structure. The firms capital structure is considered to be optimum when the market
value of shares is maximized.
3. Dividend decision:
Dividend decision is the third major financial decision. The financial manager
must decide whether the firm should distribute a portion and retain the balance. Like the
debt policy, the dividend policy should be determined in terms of impact on the
shareholders value. The optimum dividend policy is one, which maximizes the market
value of the firms shares.
4. Liquidity decision:
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Current assets management, which affects a firms liquidity, is an important

finance function. Current assets should be managed efficiently for safe guarding the
firm against the dangers of liquidity and insolvency. Investment in current assets affects
firms profitability, liquidity and insolvency. Investment in current assets affects firms
profitability, liquidity and risk. A conflict exists between profitability and liquidity
while managing current assets.
Financial analysis is the process of identifying the financial strengths and
weaknesses of the firm. It is done by establishing relationships between the items of
financial statements viz., balance sheet and profit and loss account. Financial analysis
can be undertaken by management of the firm or by parties outside the firm viz.,
owners creditors, investors and others.
MEANING OF FUNDS
Fund:
According to the dictionary meaning of the term Funds implies an
accumulation or deposit of resources from which supplies are may be drawn a more or
less permanent store or supply. It is also defined as available pecuniary resources but
these two meanings are abroad in nature and apt to macro level planning and control. A
number of definitions of the term fund have been given.
Some people call fund as cash. But it is seen in practice that the current
assets are constantly circulating through cash account in business operations and many
transactions affect flow of cash at least later or sooner.
Meaning of Flow of Funds

The term flow means movement and includes both inflow and out
flow. The term flow of funds means transfer of economic values from one asset of
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Statement Analysis
equality to another. Flow of funds is said top have taken place when any transaction
makes changes in the amount of funds available before happening of the transaction.
OBJECTIVE OF STUDY
1) Helpful in planning.
2) Helpful in organizing.
3) Helpful in interpreting financial information.
4) Helpful in making decision
5) Report to management.
NEED FOR STUDY

1. To study the financial statements of Moxie IT India Private Limited for the
period of 5 years.
2. To analyze how Moxie IT India Private Limited is utilizing its resources.
3. 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
4. To find out the sources from which additional funds were derived and the use to
which their sources were put.
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SCOPE OF THE STUDY

The present study focuses as sources funds and application of funds for a period
of time. The study is confirmed to find out the changes in the financial position of
Moxie IT India Private Limited between the beginning and ending financial Year. It is a
technical device designed to analyze the changes in the financial condition of the
business enterprises 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.
RESEARCH METHODOLOGY
Research is a process in which the researcher wishes to find out the end result for a
given problem and thus the solution helps in the future course of action. Redman and
Mory defines research as a systematized effort to gain new knowledge.
Research Design
A research design is the arrangement of conditions for collection and analysis of
data in a manner that aims to combine relevance to the research purpose with company
in procedure. In fact, the research design is the conceptual structure within which
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research is conducted; it constitutes the blue print for the collection, measurement and
analysis of data.
Sources of Data:
The data was collected through primary and secondary sources.
Primary Data:
First hand information was collected using the direct personal interview.
Interaction with guide to understand the general & specific aspects regarding
utilization of resources.
Secondary Data:
Annual reports collected from the M/S Moxie IT India Private Limited,
Hyderabad.
Period of study:
The analyze presented in the study are Annual Reports of M/S Moxie IT
India Private Limited, Hyderabad from 2010-2011 to 2014-2015
LIMITATIONS
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It should remember that a funds flow statement is not a substitute of an income

statement or a balance sheet. It provides only some additional information as
regards changes in working capital
The study based on the available annual reports and internal information of
Moxie IT India Private Limited only.
It cannot reveal continuous changes.
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PARTIES INTERESTED IN FINANCIAL ANALYSIS

There are different parties interested in the financial analysis of these
statements. But their aim and objective of the analysis differ significantly. The users of
the financial statements can be divided into two broad groups:
(a) Internal users
(b) External Users.
Internal Users
Financial Executives:
The first party interested in the financial statement analysis is the Finance
Department of the company itself. This analysis helps the Financial Manager to have a
deep insight into the financial condition of the enterprise.
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Top Management:
The Top Management of the concern is also interested in the analysis of
financial statements. It helps them in reaching conclusion on the following:
Is the firm in a position to meet its current obligations?
What sources of long-term finance are employed by the firm?
How efficiently does the firm use its assets?
Are the earnings of the firm adequate? etc.,
External Users
Investors:
Those who are interested in buying the shares of a company are naturally
interested in the financial statements to know how safe the investment already made is
and how safe the proposed investment will be.
Creditors:
Lenders are interested to know whether their loan, principal and interested will
be paid when due. Suppliers and other creditors are also interested to know the ability
of the firm to pay their dues in time.
Workers:
In our country, workers are entitled to payment of bonus which depends on the
size of profit earned. Hence, they would like to be satisfied that the bonus being paid to
them is correct.
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Customers:
They are also concerned with the stability and profitability of the enterprise.
They may be interested in knowing the financial strength of the company to take further
decisions relating to purchase of goods.
Government:
Financial analysis helps government in knowing the role and status of industry
in general and companies in particular in framing Macro-Economic policies.
Researches:
The financial statements, being a mirror of business conditions, are of great
interest to scholars understanding research in Accounting theory as well as business
affairs and practices.
Significance of Financial Analysis

Analysis of financial statement is carried out to measure the enterprises
liquidity, profitability, solvency and other indicators to assess its operating efficiency,
financial position and performance. Financial analysis serves the following purpose:
To know the operational efficiency of the business.
Helpful in measuring the solvency of the firm.
Helpful in comparison of past and present results.
Helps in measuring the profitability.
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It is more helpful in inter-firm comparison.
Helps in judging the solvency of the undertaking.
Significance of Funds Flow Statement

The funds flow statement is an important tool of financial analysis. The utility of
the funds flow statement items from the fact that it enables management,
shareholders, investors, creditors and other interested in the enterprise to
evaluate the uses of financial policies of the management.
1.Decisions relating to financing:

With the people of the funds flow statement the analyst can evaluate the
financing patterns of the enterprise. An analysis of the major sources of
funds in the past reveals what portion of the growth was financed internally
and what portion externally. The statement is also meaningful in judging
whether the company has grown at too fast a rate, credit has increased at
relatively higher rate, one would wish to evaluate the consequences of
slowness in the trade payments on the credit standing of the company and its
ability to finance in future.
2.Decision on capitalization:
The funds flow statement serves as handmaid to the finance manager in
deciding the makeup of capitalizations. Estimated uses of funds for new fixed
assets working capital, dividend, and repayment of debt are made for each of
several future years. Estimates are made of the funds to be provided by
operations, and the balance must be obtained by borrowing or issuance of new
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Statement Analysis
securities, if the indicated amount of new funds required is greater than what the
finance manager thinks possible to raise, then plans for new fixed assets
acquisition and the dividend policies are re-examined so that the uses of funds
can be brought into balance with the anticipated sources of financing them. In
particular funds statements are very useful in planning intermediate and long
term financing.
1.Reveals the reasons for financial difficulties:

The funds flow statement reveals clearly the cause for the financial difficulties
of the company. The difficulties may be due to improper mix of short and long
term sources, un necessary accumulation of inventory of fixed assets etc., These
can be found out by a careful study of the funds flow statement.
2.Others uses:
Funds Flow Statement is useful to the management in following cases.
a) Estimating the amount of funds needed for growth;
b) Improving the rate of income on assets;
c) Planning the temporary investment of idle funds;
d) Securing additional working capital when needed ;
e) Securing economies in the centralized management of cash in organisation
whose management is decentralized;
f) Planning the payment of dividend to shareholders and interest to creditor and
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Useful as control device:

The funds flow statement also serves as a control device in that the statement
compared with the budgeted figures will show to what extent the funds were put to
use according to plan. This enables the finance managers to find out deviation from
the planned course of action and take remedial steps to correct the deviations.
Useful to the external parties:

The outside parties can have a clear knowledge about the financial policies that
the company has persuade. In the light of the information so supplied by the
statement the outsiders can decide whether or not to invest in the enterprise and on
what terms funds have to be invested. The funds statement provides an insight into
the financial operations of a business enterprise an insight immensely valuable to
the finance manager in analyzing the past and future expansion plans of the
enterprise and the import of these plans an its liquidity. He can detect imbalances in
the issue of funds and undertake remedial actions.
Thus, the funds statement draws the attention of finance manager to problems
which call for detailed analysis and immediate action. In view of these funds flow
statement is becoming more popular with management. Even some bank managers
make it obligatory for the borrowers to furnish a funds statement along with their
annual balance sheet now a days many Indian companies are publishing this
statement in their annual reports although they are not obliged to do so under the
companies Act.
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Limitations of financial analysis:
Every coin has two sides. Same is the case with analysis of financial statement.
Although this analysis has much significant and usefulness yet it has certain
limitations. Financial analysis may not provide exact answers to these questions but
it does indicates what can expected in the future. The limitations of financial
analysis are given below.
1. Historical data: Analysis of the financial statements indicates about the

performance of the business in the preceding periods. It does not indicates the
present position of the business. Financial statements are prepared on historian
facts and not throw light on the current and present position of the business.
2. Lack of standard terminology: Accounting is not an exact science. It
does not universally accepted terminology. Different meanings are given to a
particular term. These are different methods of providing depreciation. Interest
may be charged on different rates. In this way, there is sufficient possibility of
manipulation and the financial statements have suffer. As a consequence
financial analysis also proves to be defective. However, in the recent past the
International Accounting Board is taking active interest and taking measures for
standard sing the accounting terminology as well as bringing standards for bring
informing in accounting system.
3. Affects of price level changes: The results shown by financial statements
may be misleading, if price level changes havent been accounted for. The ratio
may improve with the increase in price, where as the actual efficiency may not
improve. Ratios on the two years will not be meaningful for comparison, it the
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prices of commodities are different. Changes in price affects cost of production,

sales and value of assets and as a consequence comparability of suffers.
4. Non-consideration qualitative aspects: Financial analysis does not
measure the qualitative aspects of the business. It does not show the skill,
technical knowhow and the efficiency of its employees and managers. It is the
qualitative measurement of the performance. It means that analysis of financial
statements measures only one sided performance of the business. It completely
ignores human resources.
5. Mis leading results: Results shown by financial analysis may be misleading
in the absence of absolute data. For example, the analysis of one firm revels that
the increase in profits form Rs.20,000 to Rs.80,000 shows that the profit has
increased by four times. In case of another firm the analysis reveals that the
profit of this firm also increased for Rs.100 crores to Rs.400 crores, showing
fourfold increase. But this analysis ignored the size of the firms. As such, the
results may mislead.
6. Financial Statements and Funds Flow Statement:

Financial statement means the profit and loss account and the balance sheet. All
the organizations more particularly, the company from of organizations is required
to present the annual financial statements every year. The financial statements differ
with the funds flow statement in many ways.
A Funds Flow Statement is a statement measuring the inflows the inflows and
outflows of net working capital that result from any type of business activity
between two dates. An Income statement is a statement measuring the inflows and
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outflows of net assets of revenue nature that result from rendering goods on services
to customers between two dates.
A Funds Flow Statements has become a useful tool in the hands of financial
analyst. That is because the financial statements i.e., Income statement measures the
flows restricted to transaction relating to rendering of goods and services to
customers. It is not capable of any accurate information of the resources from
operating unless the income data is converted into funds data. It does not depict the
major financial transactions which have resulted in changes in Balance Sheet.
Types of analysis
Two types of analysis are undertaken to interpret the position of an enterprise.
They are:
Vertical Analysis
Horizontal Analysis
The Companies Act, 1956 permit the companies to present the financial
statements in vertical as well as horizontal form.
Vertical Analysis:
It is the analysis of relationship as between different individual components for
a given period of time. Comparison of current assets to current liabilities or comparison
of debt to equity for one point of time is the examples of vertical analysis. It can be
made in the following ways.
By preparation of common size statements of the two similar units.
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By preparing common size statement of different years of the same

business.
Horizontal Analysis:
It is the analysis of changes in different components the financial statements
over different periods with the help of a series of statements. Study of trends in debt or
share capital or their relationship over the past ten years period or study of profitability
trends for a period of five years or ten years are examples of horizontal analysis. It
comprises:
Comparison of the financial statements of different years of the same

business unit.
Comparison of financial statement of a particular year of different

business units.
Methods of Analysis
A financial analyst can adopt the following tools for analysis of the financial
statements. These are also termed as Methods of Financial Analysis.
Comparative Statement Analysis.
Common-size Statement Analysis.
Trend Analysis.
Funds flow Analysis.
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Cash flow Analysis.
Ratio Analysis.
Comparative Statement Analysis

Comparative financial statements are those statements which are designed to
provide time perspective to the consideration of various elements of financial position
embodied in such statements. In these statements figures for two or more periods are
shown side by side to facilitate comparison. Both the income statement and balance
sheet can be prepared in the form of comparative financial statements.
Common-size Statement Analysis

Common-size statement is a financial tool of studying key changes and trends in
financial position of a company. In common-size statement, each item is stated as
percentage of the total of which that item is a part, each percentage exhibits the relation
of the individual item to its respective total. Therefore, the common-size percentage
method represents a type of ratio analysis. That is why this statement is also designated
as component percentage or 100 percent statement. Preparation of the common-size
statement involves two steps:
State the total of the statement as 100 percent.
Compute the ratio of each item to the total in the statement
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There are two types of common-size statements, viz., common-size income

Statement and Balance Sheet.
Trend Analysis:
Trend analysis depicts behavior of the ratios over a period of time and the trends
in the operation of the enterprise. The trend figures are index figures giving a birds eye
view of the comparative data by presenting it over a period of time. This is horizontal
analysis of financial statement, often called as Pyramid Method of Ratio Analysis a
guide to yearly changes.
Under this form of analysis, generally financial ratios are studied for a specified
number of years. It is a dynamic analysis depicting the changes over a stated period.
The working of trend analysis involves the following three steps:
Selection of the base year.
Assignment of an index number of 100 to each item of the base year.
Calculation of percentage relationship that each item bears to the

same item in the base year
Ratio Analysis:
Ratio Analysis is powerful tool of financial analysis. The relationship between
two accounting figures, expressed mathematically, it is known as a financial ratio. In
financial analysis, a ratio is used as a benchmark for evaluating financial position and
performance of a firm. Ratios help to summarize large quantities of financial data and to
make qualitative judgment about the firms financial performance.
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Several ratios, calculated from the accounting data, can be grouped into various
classes according to financial activity or function to be evaluated. In view of the
requirements of the various users of ratios.
We may classify them into the following categories:
Liquidity Ratios.
Leverage Ratios.
Activity Ratios.
Profitability ratios.
Financial analysis is the processes of identifying the financial strengths and

weaknesses of the firm by properly establishing relationships between the items of
financial statements viz., Balance sheet and profit and loss account, financial analysis
can be undertaken by management of the firm or by parties outside the firm, Viz.,
Owners, Creditors, Investors and others.
Users of Financial Analysis

Financial analysis is the process of identifying the financial strengths and
weakness of the firm by properly establishing relationship between the items of the
Balance Sheet and the Profit and Loss Account financial analysis can be under taken by
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management of the firm of by parties outside the firm viz., Owners, Creditors, Investors
and others. The nature of analysis will differ depending on the purposes of the analyst.
Trade creditors:
Trade creditors are invested in firms ability to meet the climes over very short
period of time. Their analysis therefore, confine to the revolution of the firms liquidity
position.
Suppliers of long term debt:

On the other hands are concerned with the firms long term solvency and
survival. They analyze the firms profitability over time its ability to generate cash to
be able to pay interest and repay principle and the relationship between various courses
of funds.
Investors:
Who have invested their money in the firms shares are must be concerned about
the firms earnings. They restore more confidence in those firms. That show study
growth in earnings as such they concentrate analyzing the firms present and future
profitability.
Management:
Management of the firm would be invested in every aspect of the financial
analysis. It is their over all responsibility to see that the resources of the firms are used
most effectively and efficiently and that the firms financial condition is sound.
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Funds Flow Analysis
Significant technique of financial analysis is FUNDS FLOW ANALYSIS. It is

designed to highlight changes in the financial condition of a business concern between
concern between two points of time which generally conform to beginning and ending
financial statement dates.
Thus, Funds Flow Statement is a report which summarizes
the events taking between the two accounting periods. It spells out the sources from
which funds were derived and the uses to which these funds were put. This statement is
essentially derived from an analysis of which these have occurred in assets and
liabilities items between two balance sheet dates. In this statement, only the net changes
are shown so that the outcome of a transaction upon the financial condition of a
business enterprise reflected more sharply.
MEANING AND CONCEPT OF FUNDS

Fund:
According to the dictionary meaning of the term Funds implies an
accumulation or deposit of resources from which supplies are may be drawn a more or
less permanent store or supply. It is also defined as available pecuniary resources but
these two meanings are abroad in nature and apt to macro level planning and control. A
number of definitions of the term fund have been given.
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Some people call fund as cash. But it is seen in practice that the current
assets are constantly circulating through cash account in business operations and many
transactions affect flow of cash at least later or sooner.
For example, the sale of goods on credit increases in accounts payable rather
than in an immediate cash flow. Similarly, certain expenses may result in a current
liability since they might not have
been paid immediately. In other words, it may be
said that any current assets and current liability has its impact on working capital (as
working capital is the difference of current assets and current liabilities) rather than
cash. Therefore there is another view about meaning of fund that it means working
capital.
The term funds have been defined in a number of ways.
In a Narrow Sense:
It means cash only and a funds flow statement prepared on this is called a cash
flow statement. Such a statement enumerates net effects of the various business
transactions on cash and takes into account receipts and disbursements of cash.
In Broader sense:
The term Funds refers to money values in whatever from it may exist here Funds
means all means all financial resources used in business whatever in the firm of men,
material, money, machinery and others.
In a Popular Sense:
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The term Funds means working capital i.e., the excess of current assets over current
liabilities. The working capital concept of funds has emerged due to fact that total
resource of a business are invested partly in fixed assets in the form of fixed capital and
partly kept in firm of liquid of near liquid form as working capital.
In any business we cannot under estimate the flow of funds from two operations.
The business runs with funds but the organization knows how much important the flow
of funds is.
The Funds Flow Statement is concerned with sources and applications of

organization.
Statement of changes in working capital shows the increase or decrease in
working capital.
Funds from Operation statement shows how much funds from operations.
IMPORTANCE OF FUNDS FLOW ANALYSIS:

The importance of funds Flow analysis and ratio analysis in all undertakings
needs no emphasis.
How is it managed? What are the practices adopted? What are the problems
faced?
This study is an attempt to answer the questions. This is considered to M/S.
Moxie IT India Private Limited, Hyderabad.
Funds Flow Statement, Income Statement and Balance Sheet:
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Funds Flow Statement is not a substitute of an income statement i.e., a Profit

and Loss Account, and a Balance Sheet. The Profit and Loss Account is a document,
which indicates the extent of success achieved by a business in earning profits.
A balance sheet is a statement of financial position or status of business on
given date. It is prepared at end of accounting period. The balance sheet depicts various
resources of an understanding and the deployment of these resources in various assets
on a particular date. As it indicates the financial condition on a particular date, it is
static in nature; while funds flow statement is a dynamic one.
Funds Flow Statement tells us many financial facts, which a balance sheet
cannot tell. Balance sheet does not disclose the cause for change in the assets and
liabilities between two different points of time. Again, while balance sheet is the end
result of all accounting operations for a period of time? The funds flow statement
provides additional information as regard changes in working capital derived from
financial statements at two points of time. It is a tool of management for financial
analysis and helps in making decisions.
1. It helps in the Analysis of Financial operations:

The financial statements reveal the net effect of various transactions on the
operational and financial position of the concern. The balance sheet gives a static view
of the resource of a business and these have been put at a certain point of time. But it
does not disclose the causes for changes in the assets and liabilities between two
different points of time. The funds flow statements explains cause for such changes and
also effect these changes on the liability position of the company. Some times concern
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may operate profitability and yet its cash position may become more and worse. The
funds flow statement gives a clear answer to such a situation explaining what happened
to the profits firm.
2. It throws light on May perplex Questions of general interest:
Why were the net current assets lesser in spite of higher profits and
vise versa?
Why more dividends could not be declared in spite of available

profits?
How was it possible to distribute more dividends than the present

earnings?
What happened to the profit and where it has gone?
What happened to the proceeds of sales of fixed assets, issue of

shares, debentures, etc?
3. It helps in the Formation of Business of Realistic Dividend Policy:

Sometimes a firm has sufficient profits available for distributing as dividend but
yet may not be available to distribute for cash resources. In such cases a funds flow
statement helps in the information of a realistic dividend policy.
4. It helps in the proper Allocation of Resources:
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The resources of a concern are always limited and it wants to make the best use
of these resources. A project funds flow statement constructed for the future helps in
making managerial decisions. The firm can plan the development of its resources and
allocate them many various applications.
5. It Acts as a Future Guide:

A projected funds flow statement also acts as a guide for future to the
management. The management can come to know the various problems it ids going to
face in near future for want of funds. The firms future needs of funds can arrange to
finance these needs more effectively and avoid future problems.
6. It helps in appraising the use of Working Capital:

A funds flow statement helps in explaining the management has its working
capital and also suggest way the management has used its working capital position of
the firm.
7. It helps knowing the Overall credit Worthiness of a firm:

The financial institution and banks such as state financial institutions, industrial
development corporation of India, Industrial Development Bank of India etc., all ask for
funds flow statement constructed for a number of years before granting loans to know
the credit worthiness and paying capacity of firm. Hence a firm is seeking assistance
from these institutions has to know alternate but to prepare functional statement.
LIMITATIONS OF FUNDS FLOW STATEMENT

The Funds Flow Statement has a number of uses: however, it has certain
limitations also, which are listed below.
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It should remember that a Funds Flow Statement is not a substitute of

an income statement or a balance sheet. It provides only some
additional information as regards chances in working capital.
It cannot reveal continuous changes.
It is not an original statement but simply is arrangement of date given

in the financial statements.
It is essentially historic in nature and project funds flow statement

cannot be prepared with much accuracy.
Changes in cash are more important and relevant for financial

management than the working capital.
Business transactions and flow of funds:
It may be noted at this stage of analysis that for the purpose of funds flow
statement, the items of balance sheet are classified into two broad categories viz.,Items
of current accounts and Items of non-current accounts.
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Funds Flow
Statement Analysis
Current account Items
Current assets
Current liabilities
Cash in hand
Bills payable
Cash at bank (including fixed deposits)
Trade or sundry creditors
Bills receivable
Outstanding expences
Trade or sundry debtors
Cash credit/bank overdraft
Inventory-Raw-materials, work in-
Short-term loans
progress, Finished Goods, Stores,etc
Prepaid expenses
Income received in advance
Outstanding incomes
Long-term loans (or part) which fall due

for repayment within a year
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Funds Flow
Statement Analysis
Short-term loans and advances
Provision for doubtful debts and
Temporary investments, etc
discount on debtors
Non-current Account Items
Non-current assets
Land and Buildings
Plant and Machinery and vehicles
Furniture and fittings
Goodwill
Patents, trade marks, copy rights,
Non-current liabilities
Equity share capital
Preference share capital
Debentures
Reserves and surplus
Long term loans
preliminary expenses and profit and loss

account(deficiency),etc
The word fund is to denote working capital. Funds flow there fore refers to the
changes in the fund (i.e., working capital) by the transactions operational, financial
and investment, though the effect of all the transactions on the funds are considered, it
should be remembered here that not all the transactions cause the flow of funds .
Transactions Affecting Flow of Funds:
Increase in current assets but not any increase in current liabilities.
Decrease in current assets but not any decrease in current liabilities.
Increase in current liabilities but not any increase in current assets.
Decrease in current liabilities but not any decrease in current assets.
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Funds Flow
Statement Analysis
Transactions not Affecting Flow of Funds:

(CHANGE IN WORKING CAPITAL)
Transactions which make conversions of one current into another

current assets.
Transactions which make conversions of one current liability into

another current liability.
Transactions which bring increase or decrease in current assets

causing a corresponding increase or decrease in current liabilities by
the same amount.
Funds Flow Statement:

The Funds Flow Statement is also known as FUNDS FLOW ANALYSIS.
There are several names for this statement; some are
Statement of sources and applications of funds.
Statement of inflow and outflow of funds.
Statement of Fund Supplied and Applied.
Statement of Resources provided and Applied.
Where got and where gone Statement.
Page 35
Funds Flow
Statement Analysis
Funds Flow Statement:
The Funds Flow Statement is also known as FUNDS FLOW ANALYSIS.

There are several names for this statement; some are
Statement of sources and applications of funds.
Statement of inflow and outflow of funds.
Statement of Fund Supplied and Applied.
Statement of Resources provided and Applied.
Where got and where gone Statement.
various factors for inflow and outflow of working capital area shown in a statement,
particularly prepared for this purpose, which is known a Funds Flow Statement.
This statement reveals the manner in which the financial resources have been generated
and deployed during the accounting period. This statement is also considered as an
important one as the two traditional financial statements as it supplies important
information for the users. In brief it may be said that fund statement focuses on the flow
of funds between the various assets and equity items during the accounting period and
on analysis basis this statement is generally called as Funds Flow Analysis.
Page 36
Funds Flow
Statement Analysis
IMPORTANCE OF FUNDS FLOW STATEMENT:
The balance sheet and profit and loss account failed to provide the
information which is provided by Funds Flow statement i.e., changes in
financial position of an enterprise. This statement indicates the changes
in financial position of an enterprise.
This statement indicates the changes which have taken place between
the two accounting dates.
Gives details of sources and uses of funds during given period is of

great help to the users of financial information.
It is also a very useful tool in the hands of management judging the

financial and operating performance of the company.
It also indicates the working capital position which helps the

management in taking policy decisions regarding dividend etc.,
Funds Flow statement helps in answering questions like where the

profits have gone? Why there is imbalance existing between liquidity
position and profitability position of the enterprise? Why is the concern
financially solid in spite of losses?
It helps management to take policy decisions to decide about the

financing policies and capital expenditure programmed for future.
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Funds Flow
Statement Analysis
DIFFERENCE BETWEEN
FUNDS FLOW STATEMENT AND BALANCESHEET
FUNDS FLOW STATEMENT
1.
BALANCE SHEET
It is a statement of changes in
1. It is a statement of financial
Financial position and hence is
position on a particular date
Dynamic in nature
and hence static in nature.
2. It shows the sources and
3.
4.
2. It depicts the assets and
Applications of funds in a
funds liabilities at a
Particular period of time.
Particular point of time.
It is a tool of management for
3. It is not of much help to
Financial analysis and helps in
management in making
Making decisions.
Decisions.
Usually, schedule of changes in
4. No such schedule of
Working capital has to be prepared
changes in working
Before preparing funds flow
capital is required rather
Statement.
Profit & loss account is
Page 38
Funds Flow
Statement Analysis
Prepared.
DIFFERENCE BETWEEN
FUNDS FLOW & CAH FLOW STATEMENT
FUNDS FLOW STATEMENT
1. It is based on a wider concept
CASH FLOW STATEMENT
1. It is based on a narrower
of Funds, i.e., working capital.
concept of funds i.e., Cash.
2. It is based on accrual basis of
2. It is based on cash basis of
Accounting.
3. Schedule of changes in
Accounting.
3. Schedule of changes in
working capital is required
working capital is not
to be prepared.
required to be prepared.
4. Funds Flow Analysis reveals
4. It is prepared by taking the
the sources and applications
opening balance of cash,
of funds the net difference
adding to this all the inflows
between sources and application
of cash and deducting the
of funds represents net increase
outflows of cash from the
Page 39
Funds Flow
Statement Analysis
or decrease in working capital.
total, difference represents

Closing balance of cash.
5. It is useful for long term planning.
5. It is more useful for short

term analysis and cash
Planning.
PROCEDURE FOR PREPARING A FUNDS FLOW STATEMENT

Funds Flow statement is a method by which we study changes in the financial
position of a business enterprise between beginning and ending financial statements
dates. Hence, the funds flow statement is prepared by comparing two balance sheets
and worth the help of such other information derived form the accounts as may be
needed.
Broadly speaking, the preparation of funds flow statement consists of two parts:
Statement of Schedule of Changes in Working Capital
Statement of sources and Application of Funds
1. Statement of Changes in Working Capital:

Working Capital means the excess of current assets over current liabilities.
Statement of Changes in Working Capital Is prepared to show the changes in the
working capital between the two balance sheet dates. This statement is prepared with
the help of Current Assets and Liabilities derived with the help of Current Assets and
Current Liabilities derived from the two balance sheets as:
Working Capital = Current Assets Current Liabilities.
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Funds Flow
Statement Analysis
An increase in Current Assets increase Working Capital
A decrease in Current Assets decrease Working Capital
An increase in Current Liabilities decrease Working Capital
A decrease in current Liabilities increase Working Capital
The changes in all current assets and liabilities are merged into one figure only
either an increase or decrease in working capital over the period for which funds
statements has been prepared. If the working capital at the end of the period is more
than the working capital at the beginning thereof, the difference is expressed as
Increase in working capital. On the other hand, if the working capital at the end of the
period is less than that at the commencement, the difference is called Decrease in
Working Capital
2. Funds Flow Statement:

Funds flow statement is a final statement. It shows the amount used in a
particular period of time i.e., Application of Funds and the how much amount comes
into the organization in a particular period. Finally those application and sources are
balanced.
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Funds Flow
Statement Analysis
1) Schedule of changes in Working capital:

PARTICULARS
PREVIOUS CURRENT
EFFECT ON WORKING
YEAR
YEAR
CAPITAL
INCREASE DECREASE
***
***
**
***
***
**
***
***
**
***
***
**
****
****
Current Liabilities
***
***
Provisions
***
***
****
****
CURRENT ASSETS
Inventories
Sundry Debtors
Cash &Bank
Loans& Advances
Total Current Assets(a)

CURRENT LIABILITIES
Total current liabilities(b)

Page 42
**
**
Funds Flow
Statement Analysis
Working Capital (a-b)
***
***
working capital
***
***
****
****
Net increase or decrease in

**
**
***
***
2) Statement of sources and uses of funds:

Sources
Amount
Applications
Rs
Amount
Rs
Funds from operations
***
Redemption of preference
***
Issue of shares and
***
shares and debentures
***
Debentures
***
Repayment of loan
***
Long-term Loans
***
Purchase of Investment,
***
Sale of investment, Fixed

assets, etc
***
Non-trading Income
***
Decrease in working capital
***
Fixed assets, etc

Non-Trading Expenses
***
Increase in working capital
***
Note:* Any one of these will find the place in the statement
+ Any one of these will find the place in the statement
Funds means working capital this working capital represents the difference
between current assets, current liabilities. All flows of funds pass through working
Page 43
Funds Flow
Statement Analysis
capital. This means that every transaction has an effect on the firms working capital
position.
1. An example illustrates this as follows:2. An increase in profits increases the cash balance and hence working
capital,
3. An increase in long term liability or any decrease in fixed assets increase
the cash balance and hence working capital.
Therefore the Funds Flow Statement shows the movement of funds into or out of the
current asset account of the firm.
The movement of funds has two aspects:
Sources of funds.
Uses of funds
The former supply funds to the working capital and enhances its position. On
the other hand, the latter consume funds and erode the working capital position.
SOURCES OF FUND:
Issue of new shares
Issue of debentures
Creation of long term liability
Profit from operation
Issue of new shares:

Page 44
Funds Flow
Statement Analysis
On comparing the balance sheet of two dates there is an increase in share

capital. It would affect working capital to the extent of current assets. If it does not have
any impact upon fund, it would not be a source of fund. For example, shares issued and
cash/stock/furniture received. Merely only cash and stock will affect the fund as these
are the companies of working capital.
Issue of Debentures:
That amount of issued debentures would be a source of fund which affects
working capital.
Creation of Long term Liabilities:

If loan and mortgaged loan has been taken its increase between two balances
sheet dates would be a source of fund.
Sale of Fixed Assets:

Any decrease in fixed assets due to sale of fixed assets is shown in the sources
of fund as it involves cash or other current assets which are the elements of working
capital.
Profit from Operations:

It is a source of fund, to be shown on the sources side.
Applications of Funds:
The fund acquired in the business may be used in the following items:
LOSS FROM OPERATION
DISCHARGE OF LIABILITY
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Funds Flow
Statement Analysis
REDEMPTION OF DEBENTURES
REDEMPTION OF PREFERENCE SHARES
ADDITION IN ASSETS
Loss from Operations:
Just like profit from operations is a source. Similarly loss from operations is
treated as uses of fund. In fact, incurring of loss means out flow of funds. It may be due
to increase in liabilities or decrease in assets or both.
Discharge of Liability:
Any decrease in long term liability would be the indicator that fund ha gone
from the business liability which may be decreased due to decrease in assets ( payment
of creditors by giving cash of fixed assets to them ) or increase in liability. For example,
a liability is converted into another.
Redemption of Debentures:
If the redemption is made through conversion into shares or new debentures, it
does not affect funds. If they are rendered in cash, it would affect fund.
Redemption of Preference Shares:

If these preference shares are rendered by issue of new preference shares or
equity shares or debentures such decrease in preference shares will not be treated as use
of fund, as the flow of fund does not take place in this transaction.
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Funds Flow
Statement Analysis
Addition in Assets:
If these assets whether current or fixed are increased, it will be shown in the
users of fund because such increase entails outflow of fund. If there is increase in fixed
assets accompanied either by increase in long term liabilities or increase in share
capital, there will not be outflow of fund. On the other hand, if these fixed asset are
accompanied by decrease in current assets or increase in current liability, there would
certainly be out flow of fund.
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Funds Flow
Statement Analysis
INTRODUCTION
Over the past decade, the Information Technology (IT) industry has
become one of the fastest growing industries in India because of which it has caught
world attention. Indian IT-ITES industry grew at a rate of 33 % in FY2008. India is now
being identified as powerhouse for incremental development of computer software. It
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Funds Flow
Statement Analysis
has grown from USD 4 billion industry to USD 58.8 billion industry in FY2008-09
employing over 2 million people. IT-BPO Industry has become growth engine for the
economy contributing substantially to increases in GDP, urban employment and exports
to achieve vision of 'young and resilient India'. Although domestic market is growing in
India but still the major propellers of growth are exports. The key segments that have
contributed significantly to industry's exports include-Software and services (IT
services) and IT enabled services. In the face of current recession though the mood is
that of cautious optimism but Industry is expected to witness sustainable growth over
period of two years. But at the same time while industry has significant headroom for
growth ,as the competition is increasing with China emerging as major threat ,all the
stakeholders of Indian IT industry must give concentrated efforts to ensure that India
realizes its potential and maintains its leadership position in future also.
IT INDUSTRY IN INDIA
Information technology in India is an industry consisting of two major
components: IT services and business process outsourcing (BPO). The sector has
increased its contribution to India's GDP from 1.2% in 1998 to 7.5% in
2012. According to NASSCOM, the sector aggregated revenues of US$147 billion in
2015, where export revenue stood at US$99 billion and domestic at US$48 billion,
growing by over 13%. India's current Prime Minister Narendra Modi has started
'Digital India' project to give IT a secured position inside & outside India.
This sector has also led to massive employment generation. The industry
continues to be a net employment generator expected to add 230,000 jobs in fiscal
year 2012, thus providing direct employment to about 2.8 million, and indirectly
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Funds Flow
Statement Analysis
employing
8.9
million
people,
making
it
dominant
player
in
the
global outsourcing sector. However, it continues to face challenges of competitiveness

in
the
globalized
and
modern
world,
particularly
from
countries
like China and Philippines.
IT INDUSTRY IN ANDHRA PRADESH

Before the bifurcation of the two states these industries were in Hyderabad,
capital of A.P.
The Hyderabad Information Technology
abbreviated
as HITEC
City,
is
one
and Engineering Consultancy

of
the
City,
leading Information
Technology, Engineering, Health informatics, and Bioinformatics hubs of India situated

in Hyderabad, India. HITEC City is spread across 200 acres (81 ha) of land under
suburbs of Madhapur, Gachibowli, Kondapur, Manikonda, and Nanakramguda, the
technology township is also known as Cyberabad. HITEC City is within two kilometers
of the residential and commercial suburb of Jubilee Hills. HITEC City was
commissioned initially with L&T ECC and was named L&T INFOCITY. The Project is
being developed by Larsen and Toubro Limited through its Special Purpose Vehicle,
L&T Hitech City Limited, a joint venture company of L&T Infocity Limited and
Andhra Pradesh Industrial Infrastructure Corporation Limited. HITEC City has
emerged as the symbolic heart of cosmopolitan Hyderabad.
Capacity, Performance and Road Ahead

The total number of registered companies in the country has crossed 13 lakh mark.
As of 2010-11, India had about 311.52 lakh MSMEs and 48 million SMEs.
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Funds Flow
Statement Analysis
P.S. India has more than 1.5 million (15 lakh) SMB Facebook Pages and is growing at
over 70 per cent year-on-year," as per Facebook.
According to industry analyst Gartner, the size of the worldwide software industry in
2013 was US$407.3 billion, an increase of 4.8% over 2012. As in past years, the largest
four software vendors were Microsoft, Oracle Corporation, IBM, and SAP respectively.
Investments
Indian IT's core competencies and strengths have attracted significant investments from
major countries. The computer software and hardware sector in India attracted
cumulative Foreign Direct Investment (FDI) inflows worth US$ 21.02 billion between
April 2000 and March 2016, according to data released by the Department of Industrial
Policy and Promotion (DIPP).
Indian start-ups are estimated to have raised US$ 1.4 billion across 307 deals in quarter
ending March 2016.
Most large technology companies looking to expand have so far focused primarily on
bigger enterprises, but a report from market research firm Zinnov highlighted that the
small and medium businesses will present a lucrative opportunity worth US$ 11.6
billion in 2015, which is expected to grow to US$ 25.8 billion in 2020. Moreover, India
has nearly 51 million such businesses of which 12 million have a high degree of
technology influence and are looking to adopt newer IT products, as per the report.
Some of the major developments in the Indian IT and ITeS sector are as follows:
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Funds Flow
Statement Analysis
Druva Incorporation, a data protection firm, has received US$ 51 million in a

funding round led by its existing investor Sequoia Capital India along with new
investor EDBI which is the investment arm of the Singapore Economic
Development Board (EDB).
Google, the American technology giant, has launched a new Wi-Fi platform
called Google station, under which the company will install Wi-Fi hot spots in
places frequented by a large number of people like malls, cafes, universities.
Reliance Industries Ltd (RIL) plans to set up entrepreneurship hubs in key cities
and towns, and a Rs 5,000 crore (US$ 748 million) fund, under the name of Jio
Digital India Startup Fund, to invest in technology based startups.
Gurgaon-based digital wallet start-up MobiKwik, which is owned and operated

by One MobiKwik Systems Private Limited, has raised US$ 40 million from
Nasdaq-listed firm Net1, a South African payments technology company.
Orange Business Services, the business services arm of Orange Group, has
launched a state data centre for Himachal Pradesh government, which will be
the first data centre in India to be designed using 'green' data centre concepts
that minimise power requirements and increase power utilisation efficiency.
PurpleTalk Inc, a US based mobile solutions company, has invested US$ 1

million in Nukkad Shops, a Hyderabad based uber-local commerce platform that
helps neighbourhood retail stores take their businesses online through a mobile
app.
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Funds Flow
Statement Analysis
KartRocket, a Delhi based e-commerce enabler has completed its US$ 8 million
funding round by raising US$ 2 million from a Japanese investor, which will be
used to enhance Kraftly, a mobile-first online-to-offline marketplace targeting
small sellers, individuals and home-based entrepreneurs in India in product
categories such as apparel and accessories.
Mumbai-based baby care and kids products e-tailer, Hopscotch.in, has raised
US$ 13 million in a Series C round of funding from Facebook co-founder Mr
Eduardo Saverin, which will help the firm in growth and expansion of its
technology platform.
MoMark Services, a mobile based customer engagement platform for small and
medium businesses, has raised US$ 600,000 from YourNest Angel Fund and
LNB Group, to scale up its product offerings and talent acquisition.
Shouut, a social discovery app by Giant Tech Labs Pvt Ltd, which helps
consumers discover deals, buy event tickets or redeem coupons, has raised US$
500,000 in angel funding from a high net-worth individual angel investor based
in India.
Apple Inc. plans to set up its first technology development centre outside the US
in Hyderabad with an investment of US$ 25 million, which is expected to create
4,500 jobs, as per Mr Jayesh Ranjan, Secretary, IT for the state of Telangana.
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Funds Flow
Statement Analysis
Xpressbees, an e-commerce logistics firm operated by Busybees Logistics

Solutions Private Limited, has raised US$ 12.5 million in a Series A funding, led
by its existing investors SAIF Partners, IDG Ventures, Vertex Ventures and
Valiant Capital, which will be used to strengthen technology initiatives and
processes of the firm.
Housejoy, an online home services provider, has raised Rs 150 crore (US$ 22
million) in a Series B round of funding led by Amazon, and which also includes
new investors such as Vertex Ventures, Qualcomm and Ru-Net Technology
Partners.
Global PE firm Blackstone Group has acquired a minority stake in an Indian

travel, transportation and logistics software firm, IBS Software, for US$ 170
million, by buying the stake from General Atlantic and few other shareholders.
Indias top-tier IT company, Infosys Ltd, has bought a minority stake worth US$
3 million in Whoop, which is a US-based start-up that makes activity trackers
worn by athletes.
Microsoft Ventures is planning to incubate 500 start-ups in India in the next five
years with a vision to create a viable and profitable business out of the booming
start-up sector in India.
National Association of Software and Services Companies (NASSCOM) plans

to open four more tech start-up incubation centres in different parts of India, in
addition to existing three, in support of Government of Indias Start-up India
initiative.
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Funds Flow
Statement Analysis
Nasscom Foundation, a non-profit organisation which is a part of Nasscom, has

partnered with SAP India to establish 25 National Digital Literacy Mission
(NDLM) centres in 12 cities across India, as a part of Government of India's
Digital India initiative.
Infosys, Indias second largest Information Technology services company has

acquired US-based Noah Consulting, a provider of advanced information
management consulting services for the oil and gas industry.
US-based Callidus Software Inc, cloud-based sales, marketing, learning and

customer experience solutions provider, has opened its centre in Hyderabad and
also launched its The Lead to Money suite in Indian markets.
Wipro Ventures, Wipros US$ 100 million corporate venture arm, plans to invest
in early-stage Venture Capital (VC) funds based in the US to pursue a strategy
of investing/partnering country-focussed VCs.
A recent study by research firm International Data Corporation (IDC) suggests

that India may soon be able to catch up with the global technology trends that
have disrupted enterprises, industry and the way consumers behave and transact.
Reliance is building a 650,000 square feet (sq ft) data centre in Indiaits 10th
data centre in the countrywith a combined capacity of about 1 million sq ft
and an overall investment of US$ 200 million.
Intel Corp plans to invest about US$ 62 million in 16 technology companies,

working on wearable, data analytics and the Internet of Things (IoT), in 2015
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Funds Flow
Statement Analysis
through its investment arm Intel Capital. The Indian IoT industry is expected be
worth US$ 15 billion and to connect 28 billion devices to the internet by 2020.
Overview of the performance of the IT Sector

Some of the major initiatives taken by the government to promote IT and
ITeS sector in India are as follows:
Mr Ravi Shakar Prasad, Minister of Communication and Information

Technology, announced plan to increase the number of common service centres
or e-Seva centres to 250,000 from 150,000 currently to enable village level
entrepreneurs to interact with national experts for guidance, besides serving as a
e-services distribution point.
The Government of Telangana has signed an agreement with network solutions

giant Cisco Systems Incorporation, to cooperate on a host of technology
initiatives, including Smart Cities, Internet of Things, cybersecurity, education
digitisation of monuments.
The Railway Ministry plans to give a digital push to the India Railways by
introducing bar-coded tickets, Global Positioning System (GPS) based
information systems inside coaches, integration of all facilities dealing with
ticketing issues, Wi-Fi facilities at the stations, super-fast long-route train
service for unreserved passengers among other developments, which will help to
increase the passenger traffic.
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Funds Flow
Statement Analysis
The Pune Smart City Development Corporation (PSCDCL) has signed a

memorandum of understanding (MOU) with the European Business and
Technology Centre (EBTC), which will allow it to gain access to real-time
knowledge of technologies, solutions and best practices from Europe.
The e-Tourist Visa (e-TV) scheme has been extended to 37 more countries
thereby taking the total count of countries under the scheme to 150 countries.
Department of Electronics & Information Technology and M/s Canbank Venture

Capital Fund Ltd plan to launch an Electronics Development Fund (EDF),
which will be a 'Fund of Funds' to invest in 'Daughter Funds' which would
provide risk capital to companies developing new technologies in the area of
electronics, nano-electronics and Information Technology (IT).
The Human Resource Development (HRD) Ministry has entered into a

partnership with private companies, including Tata Motors Ltd, Tata
Consultancy Services Ltd and real-estate firm Hubtown Ltd, to open three
Indian Institutes of Information Technology (IIITs), through public-private
partnership (PPP), at Nagpur, Ranchi and Pune.
Government of India is planning to develop five incubation centres for 'Internet

of Things' (IoT) start-ups, as a part of Prime Minister Mr Narendra Modi's
Digital India and Startup India campaign, with at least two centres to be set up
in rural areas to develop solutions for smart agriculture.
The Government of India has launched the Digital India program to provide
several government services to the people using IT and to integrate the
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Funds Flow
Statement Analysis
government departments and the people of India. The adoption of key

technologies across sectors spurred by the 'Digital India Initiative' could help
boost India's Gross Domestic Product (GDP) by US$ 550 billion to US$ 1
trillion by 2025@@.
India and the US have agreed to jointly explore opportunities for collaboration
on implementing India's ambitious Rs 1.13 trillion (US$ 16.58 billion) Digital
India Initiative. The two sides also agreed to hold the US-India Information and
Communication Technology (ICT) Working Group in India later this year.
The Government of Telangana has begun construction of a technology incubator

in Hyderabaddubbed T-Hubto reposition the city as a technology
destination. The state government is initially investing Rs 35 crore (US$ 5.14
million) to set up a 60,000 sq ft space, labelled the largest start-up incubator in
the county, at the campus of International Institute of Information TechnologyHyderabad (IIIT-H). Once completed, the project is proposed to be the worlds
biggest start-up incubator housing 1,000 start-ups.
The Department of Electronics and Information Technology (DeitY) plans to

start a digital literacy programme, aimed at training over six crore Indians in the
next three years to empower them for digital inclusion.
Technological advancements
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Statement Analysis
Information technology has been one of the most encouraging research areas
throughout the globe over the past two decades. From commerce and government to
scientific
discovery, healthcare,
education,
entertainment,
and
environmental
management, information technology is indispensable and will continue to fuel further

advances in all facets of human endeavors.
In this special issue, we concentrate mainly on the intelligent computing techniques as
well as the emerging applications of information technology. Its aim is to unify the
picture of contemporary intelligent computing techniques as an integral concept that
highlights the trends in advanced computational intelligence and bridges theoretical
research with applications.
We are soliciting papers that present recent results, as well as more speculative
presentations that discuss research challenges, define new applications, and propose
methodologies for evaluating and the roadmap for achieving the vision of artificial
intelligence, pattern recognition, evolutionary computing, information retrieval,
computational neuroscience and bioscience, soft computing, human computer interface
issues, and so forth. Topics covering industrial issues/applications and academic
research into intelligent computing will be included. Potential topics include, but are not
limited to:
Artificial intelligence
Computational neuroscience and bioscience
Cloud computing
Decision support systems
Evolutionary computing
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Funds Flow
Statement Analysis
Human computer interface
Information retrieval
Intelligent agent and web applications
Intelligent business computing
Intelligent control and automation
Intelligent fault diagnosis
Intelligent sensor networks
Knowledge discovery and data mining
Next generation Internet
Machine learning theory and methods
Pattern recognition
Reasoning and expert systems
Soft computing
Speech, image, and video processing
The Internet of things
Virtual reality and human-computer Interaction
SWOT Analysis
SWOT ANALYSIS OF IT INDUSTRY
Strengths
Weaknesses
Page 60
Funds Flow
Statement Analysis
Highly skilled human

resource
Low wage structure
Absence of practical knowledge

among fresh graduates
Dearth of suitable candidates
Quality of work
Less Research and

Development
Initiatives taken by the

Government(setting up HiTech Parks and
Contribution of IT sector to
India s GDP
implementation of e-
is still rather small.

Employee salaries in IT sector
governance projects)
are increasing
Many global players have
tremendously.
set-up operations in India

like
Microsoft,
wages benefit will soon come
Oracle,
to an end.
Adobe, etc.
Following Quality Standards
such as
ISO 9000, SEICMM etc.
English-speaking professionals
Cost competitiveness
Quality telecommunications
infrastructure
Indian time zone (24 x7
services to the global
customers). Time difference
between India and America
is approximately12 hours,
which is beneficial for
Opportunities
Low
Threats
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Funds Flow
Statement Analysis
High quality IT education
market
Lack of data security

systems
Increasing number of working

age
people
Countries like China and

Philippines with qualified
work force making efforts to
Indias well developed soft
overcome the English
infrastructure
Upcoming International Players
in
language barrier
IT development concentrated
Challenges before the industry:

HR Challenges
1. To Cope with Sweeping Environmental Challenges.
2. To Make the Company a Better Place to Work.
3. To Integrate HR with Business Strategy.
4. Upgrading Recruitment and Selection Techniques.
5. Attracting the Best Talent.
6. Recruit People Most likely to Stay,not Just Hottest Talent.
7. To Cope with Shortage of Highly Skilled IT Professionals.

Page 62
Funds Flow
Statement Analysis
8. Up-gradation of Skills through Continuous Retraining.
9. To Emphasize on Creativity and Innovation through Training.
10. Training in Communication and Behavioral Skills.
11. To Design Training that Substitutes Work Experience.
12. To Design an Effective Performance Appraisal System.
13. Develop New Systems of Compensation and Reward.
14. To Find New ways for Retention and Motivation.
15. Managing Technology-Driven Organizational Change.
16. Develop Improved Approach to Career Planning.
17. Manage High-Job Stress Among Software Professionals.
18. Develop Feedback Mechanism from Superiors to Subordinates.
Page 63
Funds Flow
Statement Analysis
19. To Ensure that Employees Know Business Goals.
20. Encouraging Commitment to Quality and Customer Focus.
21. Adjusting to Shifting Values and Workforce Composition.
22. To Keep up-to-date Technologically.
Major Software Companies

1. TATA Consultancy Service
2. INFOSYS
3. WIPRO
4. TECH MAHINDRA
5. HCL Technologies
6. Mphasis
7. ORACLE Financial Service
8. MIND TREE Ltd.
9. Polaris Technology
10. Rolta India
Page 64
Funds Flow
Statement Analysis
Page 65
Funds Flow
Statement Analysis
INTRODUCTION
Moxie IT is a leader in technology services and consulting. We enable clients

to create and execute strategies for their digital transformation. From engineering to
application
development,
knowledge
management
and
business
process
management, we help our clients find the right problems to solve, and to solve these
effectively. Our team of innovators, is differentiated by the imagination, knowledge and
experience, across industries and technologies, that we bring to every project we
undertake.
Services
CLOUD SOFTWARE ENGINEERING
Software Cloud Architecture
Page 66
Funds Flow
Statement Analysis
Developing Cloud-Native Applications
Multitenancy Implementation
Migrating Applications to Cloud
Migrating Data to/from Cloud
OPERATIONS
Establishing Site Reliability Engineering Practice
Continuous Integration (Jenkins and others
Continuous Delivery (Spinnaker and others)
Configuration Management (Ansible and others)
Containers Orchestration (Kubernetes and others)
DATA PLATFORMS
Interactive Data Analysis (Google BigQuery)
Big Data Analytics (Hadoop / Spark / Flink / Drill / Storm)
Machine Learning
Amazon EMR, Redshift and Kinesis
Page 67
Funds Flow
Statement Analysis
Event Stream Processing (Dataflow, Spark Streaming)
TRAINING
Official Google Cloud Platform Training
AWS Training for Developers, Architects and Ops
Site Reliability Engineering Mentoring
Multi-Cloud Architecture Mentoring
Source Control & Application Life cycle
GOOGLE APPS BUSINESS
Project Management
User Adoption and Change Management
SSO, Directory Sync, Password Sync
Data Migration (Emails, Files, Calendars and Contacts)
Risk Management
MICROSOFT OFFICE 365
Azure Active Directory Domain Services
User Adoption and Change Management
Page 68
Funds Flow
Statement Analysis
ADFS & Directory Sync)
Data Migration (Emails, Files, Calendars and Contacts)
Automatic Client Software Distribution
SALIENT FEATURES OF Moxie IT:
A very perceptible saving in costs (up to 20% to 25%) due to low

setting time
Superior quality of the Software solutions resulting in a better overall

finest
Stronger bonding with aggregates.
Targeted towards customers satisfaction.
Competitiveness of IT Project:
Ducon Infratech
Mastek
Financial Tech
Saksoft
Blue Star Info
AGC Networks
Mindteck
Bodhtree Cons
ICSA
76.45
191.10
80.90
317.65
289.95
92.00
93.10
13.80
2.80
Man power:
Page 69
599.54
445.10
372.78
331.15
313.15
261.89
235.67
24.90
13.48
32.63
378.67
141.33
50.75
138.21
313.19
86.65
46.21
4.56
0.39
13.37
-13.41
10.47
11.69
-36.71
8.20
1.77
-20.80
Funds Flow
Statement Analysis
Based on requirement of individual departments, Head of that department is

asked to give information to man power planning department regarding the number of
persons required.
The departmental heads assess their requirements based on the
available departmental job description to ensure role clarity and to avoid role ambiguity.
The Central Personnel Dept. carries out the recruitment process.
The total employees in Moxie IT are 345 covering all departments. There are
nearly 500 contract labor working every day on casual basis.
ADVANTAGES:
Here are five of the many reasons why Moxie IT edges out its competitors.
High compressive strength
Better soundness
Faster de shuttering of formed work
Here are just a few reasons why Moxie IT chosen by millions of

India.
Customer derived projects
Greater fineness
Slow initial and fast final setting
Wide range of applications
Quality customer services
Page 70
Funds Flow
Statement Analysis
Page 71
Funds Flow
Statement Analysis
STATEMENT OF CHANGES IN WORKING CAPITAL

2010-2011
Table-1
Page 72
Funds Flow
Statement Analysis
Particulars
2010
Rs.
2011
Rs.
Changes in WC
Rs.
Increase
Decrease
Current Assets:
Inventories
Sundry Debtors
8,88,68,774
11,52,02,941
26334167
11,23,63,109
17,85,50,027
66186918
1,24,33,458
7,27,32,900
6029925442
28,17,26,538
59,86,51,897
316925359
49,53,91,879
96,51,37,765
18,89,36,012
Cash &Bank
Loans& Advances
Current Liabilities:
Current Liabilities &
Provisions
23,49,02,360
23,49,02,360
42,38,38,372
Working Capital a-b
26,04,89,519
Increase in Working Capital
28,08,09,874
54,12,99,393
42,38,38,372
54,12,99,393
28,08,09,874
54,12,99,393
46,97,45,886
46,97,45,886
Table-1
Page 73
Funds Flow
Statement Analysis
Changes In Working Capital

1200000000
1000000000
800000000
600000000
400000000
200000000
0
Total
Current
Assets
Total
Current
Liabilities
Working
Capital
Sources: we have taken this information from Moxie IT, from 2010-2011
Page 74
2010
2011
Funds Flow
Statement Analysis
Interpretation:
Comparing the year 2010-2011 the current assets increased by 46,97,45,886

rupees compare the current liabilities 18,89,36,012 as a result working capital increase
28,08,09,874 rupees. Therefore short term financial position of The Financial Services
limited is good.
FUNDS FLOW STATEMENT FOR THE YEAR ENDED WITH

31.12.2011
Table-2
Amount
Sources
Rs.
Amount
Uses
Rs.
12,06,57,250 Increase in Working capital
28,08,09,874
Long term loans
85,74,96,949 Purchase of fixed assets
113,41,49,337
Sale of Investments
40,02,17,536
Decrease in Miscellaneous
14,78,511
expenditure
Increase in Deferred tax liability
3,51,08,965
63,78,87,187
Interpretation:
Page 75
63,78,87,187
Funds Flow
Statement Analysis
The Financial Services limited take huge amount of Long term

loans through funds from operations and Sale of investments. The Financial Services
limited use some of these funds to purchase fixed assets. The Financial Services limited
has also used these funds to Increase working capital.

2011-2012
Particulars
2011
Rs.
2012
Rs.
Changes in WC
Rs.
Increase
Decrease
Current Assets:
Inventories
11,52,02,941
Sundry Debtors
17,85,50,027
26,56,85,722
7,27,32,900
4,10,06,192
59,86,51,897
59,81,54,044
96,51,37,765
106,64,29,271
42,38,38,372
74,94,16,641
42,38,38,372
74,94,16,641
54,12,99,393
31,70,12,630
Cash &Bank
16,15,83,313
4,63,80,372
8,71,35,695
3,17,26,708
Loans& Advances
4,97,853
Provisions
Working Capital a-b
Decrease in Working Capital

22,42,86,763
Page 76
32,55,78,269
22,42,86,763
Funds Flow
Statement Analysis
54,12,99,393
54,12,99,393
35,78,02,830
Table-3
Table-3
Page 77
35,78,02,83
Funds Flow
Statement Analysis
2012
2011
Page 78
Changes in Working Capital
1200000000
1000000000
Funds Flow
Statement800000000
Analysis
600000000
Sources: we have400000000
taken this information from Moxie IT, from 2011-2012
nt
u
200000000
o
m
Interpretation:
A
Comparing the year 2011-2012 Total

the current assetsTotal
increased by Working
10,12,91,506
Current
Capital
rupees compare the current liabilities 32,55,78,269
as aCurrent
result working capital
decrease
Assets
Liabilities
22,42,86,763 rupees. There fore short term financial position of The Financial Services
limited is not good.

31.12.2012
Table-4
Amount
Sources
Rs.
Amount
Uses
16,01,23,732
Long term loans
15,15,15,878 Purchase of fixed assets
Decrease in Working capital
22,42,86,763 Purchase of Investments
10,76,442
expenditure
Increase in Deferred tax liability
10,08,85,372
Page 79
Redemption of shares
Rs.
5,40,942
21,69,98,475
42,03,47,770
Funds Flow
Statement Analysis
63,78,87,187
63,78,87,187
Interpretation:
The Financial Services limited take huge amount of Long term
loans through funds from operations and Purchase of investments. The Financial
Services limited use some of these funds to purchase fixed assets. The Financial
Services limited is also use these funds to Decrease working capital.

2012-2013
Table-5
Particulars
2012
Rs.
2013
Rs.
Changes in WC
Rs.
Increase
Page 80
Decrease
Funds Flow
Statement Analysis
Current Assets:
Inventories
16,15,83,313
21,89,56,216
5,73,72,903
Sundry Debtors
26,56,85,722
37,09,00434
10,52,14,712
Cash & Bank
4,10,06,192
11,21,52,347
7,11,46,155
Loans& Advances
59,81,54,044
62,82,93,656
3,01,39,612
106,64,29,271
133,03,02,653
74,94,16,641
76,05,69,548
74,94,16,641
76,05,69,548
31,70,12,630
56,97,33,105

Provisions
Working capital a-b
Increase in working capital
25,27,20,475
56,97,33,105
56,97,33,105
26,38,73,382
1,11,52,907
25,27,20,475
26,38,73,382
Table-5
Page 81
Funds Flow
Statement Analysis

1400000000
1200000000
1000000000
800000000
600000000
400000000
200000000
0
Total
Current
Page
82
Assets
Total
Working
Current
Capital
Liabilities
2012
2013
Funds Flow
Statement Analysis
Sources: we have taken this information from Moxie IT, from 2012-2013.
Interpretation:
Comparing the year 2012-2013 the current assets increased by 26,38,73,382
rupees compare the current liabilities 1,11,52,907 as a result working capital Increase
25,27,20,475 rupees. There fore short term financial position of The Financial Services
limited is good.

31.12.2013
Table-6
Amount
Sources
Rs.
23,51,80,715
Long term loans
27,31,74,976
Amount
Uses
Increase in Working capital
Rs.
25,27,20,475
2,50,800 Purchase of fixed assets
22,58,55,400
Purchase of Investments
4,56,00,000
expenditure
Increase in Differed tax liability
1,55,69,384
52,41,75,875
Page 83
52,41,75,875
Funds Flow
Statement Analysis
Interpretation:
The Financial Services limited take huge amount of long term loans through
funds from operations and Purchase of investment. The Financial Services limited use
some of these funds to purchase fixed assets. The Financial Services limited is also use
these funds to increase working capital.

2013-2014
Table-7
Particulars
2013
Rs.
2014
Rs.
Changes in WC
Rs.
Increase
Decrease
Current Assets:
Inventories
21,89,56,216
35,30,33,377
13,40,77,161
Sundry Debtors
37,09,00434
41,35,39,323
4,26,38,889
Cash & Bank
11,21,52,347
11,86,08,237
64,55,890
Loans& Advances
56,39,26,687
56,98,39,851
59,13,164
126,59,35,684
145,50,20,788
69,62,02,579
102,90,32,147

Provisions
Page 84
33,28,29,568
Funds Flow
Statement Analysis
69,62,02,579
102,90,32,147
56,97,33,105
42,59,88,641
Total current Liabilities(b)
Working capital a-b

Decrease in working capital
14,37,44,464
56,97,33,105
56,97,33,105
14,37,44,464
33,28,29,568
33,28,29,568
Table-7

1600000000
1400000000
1200000000
1000000000
800000000
600000000
400000000
200000000
0
2013
2014
Total
Current
Assets
Total
Current
Liabilities
Working
Capital
Page 85
Funds Flow
Statement Analysis
Interpretation: - Comparing the year 2013-2014 the current assets increased by

18,90,85,104 rupees compare the current liabilities 33,28,29,568 as a result working
capital Decrease 14,37,44,464 rupees. There fore short term financial position of The
Financial Services limited is not good.

31.12.2014
Table-8
Amount
Sources

Increase in loans
Amount
Rs.
Uses
99,81,84,829
Purchase of fixed assets
225,80,53,270
Purchase of Investments
3,59,00,000
118,07,66,087
89,747
expenditure
Proposed Dividend
Decrease in Working capital
14,37,44,464
Increase in Deffered tax liability
10,49,68,143
242,77,53,270
Rs.
Page 86
13,38,00,000
242,77,53,270
Funds Flow
Statement Analysis
Interpretation:
The Financial Services limited take huge amount of Long term loans through
funds from operations and Purchase of investment. The Financial Services limited use
some of these funds to purchase fixed assets. The Financial Services limited is also use
these funds to Decrease working capital.
Page 87
Funds Flow
Statement Analysis
FINDINGS:
It is found that The Financial Services limited is holding sufficient share capital.
It is inferred that The Financial Services limited is maintaining a minimum Cash

Balances.
In 2010-2011 the Working capital of The Financial Services limited is increased

by 28,08,09,874 rupees. In the same period the long term loans of The Financial
Services limited is high because the company get huge amount of funds from
operations and also from decrease in miscellaneous expenditure reserve. The
Financial Services limited uses that fund to redeem the shares and to purchase
fixed assets.
In 2011-2012 the Working capital of The Financial Services limited is decreased

by 22,42,86,763 but the flow of funds is decreased because The Financial
Services limited do not get any funds from decrease of reserves, The Financial
Services limited get funds only from operations and purchase of investment. The
Financial Services limited uses some of those funds to purchase fixed assets.
Page 88
Funds Flow
Statement Analysis
In 2012-2013 the Working capital of The Financial Services limited is increased

by 25,27,20,475 but the flow of funds is high as compared to previous year
because The Financial Services limited get funds only from operating activities.
The Financial Services limited use some funds to purchase fixed assets.
In 2013-2014 the Working capital of The Financial Services limited is decreased

by 14,37,44,464 but the flow of funds is high as compared to previous year
because The Financial Services limited get funds only from operating activities.
The Financial Services limited use some funds to purchase fixed assets
Page 89
Funds Flow
Statement Analysis
SUGGESTIONS:
It may be suggested that The Financial Services limited should utilize Limited
Funds for the purchase of fixed assets.
If The Financial Services limited spend more money on purchase of fixed assets
& investments it effects the growth of the Moxie IT India Private Limited.
The company must maintain the sufficient working capital in order to meet the
daily needs of the firm.
The company should increase its investments and its fixed assets.
It has to keep concentration on working capital, expenses, and fixed assets.
It has to decrease its Long term loans (liabilities).
It is better to maintain the same steps which it has followed in 2010-11 to

decrease its liabilities and maintain the profit.
Page 90
Funds Flow
Statement Analysis
Page 91
Funds Flow
Statement Analysis
CONCLUSION
It can be concluded that funds flow performance of the financial

services limited is good because funds from operations are high in every year but
increase in loans of funds. The Financial services limited utilize some funds to purchase
fixed assets every year the financial services limited do some investment activities to
utilize funds effectively.
Page 92
Funds Flow
Statement Analysis
Page 93
Funds Flow
Statement Analysis
BIBLIOGRAPHY
Student hand book on cost accounting and financial management by B. Sarvana

Prasad, Edition-5thMay 2006, Page. No. 16.1 to 16.11
Financial Accounting & Finance by K. Rajeshwar Rao, G. Prasad, Edition-1998,

14.1 to 14.6, 15.1 to 15.12
Financial Management Theory & Practice by Prasanna Chandra, Edition-5th

2004, 727 to 758
Financial Management by I.M. Pandey, Edition -4th 2005, Page no 345 to 325
Moxie IT Annual reports from 2010-2014
Page 94
Funds Flow
Statement Analysis
http:/www.Moxieit.com
Page 95
Funds Flow
Statement Analysis
Moxie IT India Private LIMITED

BALANCE SHEET AS AT 31.3.2011
Particulars
Schedule No.
2006
Share Capital
13,43,40,942
Reserves and Surplus
89,66,23,798
Loan Funds
SOURCES OF FUNDS
Share holders Funds:
Secured Loans
94,03,76,495
Unsecured Loans
96,39,05,443
Deferred Tax Liability
24,78,34,769
Total
318,30,81,447
APPLICATION OF FUNDS
266,23,57,147
Fixed Assets
Page 96
Funds Flow
Statement Analysis
Gross Block
55,57,90,567
Less: Depreciation
Net Block
210,65,66,665
Add: Capital works- in- progress
18,15,99,085
INVESTMENTS
Current Assets, Loans and Advances
Inventories
228,81,65,665
35,21,99,400
Sundry debtors
11,52,02,941
Cash and Bank Balances
17,85,50,027
Loans and Advances
7,27,32,900
59, 86,51,897
96,51,37,765
Less: Current Liabilities and provisions
42,38,38,372
Miscellaneous Expenditure(to the extent
not return of or adjusted)
54,12,99,393
14,16,989
Total
318,30,81,4471,447

Particulars
Schedule No.
2006
Share Capital
13,38,00,000
105,67,47,530
Loan Funds
SOURCES OF FUNDS
Secured Loans
84,56,73,700
Unsecured Loans
121,84,87,846
34,87,20,141
Total
360,34,29,217
Page 97
Funds Flow
Statement Analysis
Fixed Assets
316,89,56,316
Gross Block
67,98,52,280
Less: Depreciation
Net Block
248,91,04,036
1,60,60,104
INVESTMENTS
Inventories
250,51,64,140
78,09,11,900
Sundry debtors
16,15,83,313
26,56,85,722
Loans and Advances
4,10,06,192
59,81,54,044
106,64,29,271
74,94,16,641
31,70,12,630
3,40,547
Total
360,34,29,217,81,447

Particulars
Schedule No.
2007
Share Capital
13,38,00,000
129,19,28,245
Loan Funds
SOURCES OF FUNDS
Secured Loans
92,73,53,942
Unsecured Loans
140,99,82,580
36,42,89,525
Total
412,73,54,292
Page 98
Funds Flow
Statement Analysis
Fixed Assets
D
Gross Block
320,81,62,454
82,53,36,717
Less: Depreciation
238,28,25,737
Net Block
34,81,93,803

E
273,10,19,540
82,65,11,900
INVESTMENTS
Inventories
21,89,56,216
37,09,00,434
Sundry debtors
11,21,52,347
56,39,26,687
Loans and Advances
126,59,35,684
69,62,02,579

H
56,97,33,105
89,747
I
Total
412,73,54,292,81,447

Particulars
Schedule No.
2008
Share Capital
13,38,00,000
215,63,13,074
Loan Funds
SOURCES OF FUNDS
Secured Loans
173,23,88,532
Unsecured Loans
178,57,14,077
46,92,57,668
Page 99
Funds Flow
Statement Analysis
627,74,73,351
Total
Fixed Assets
398,46,31,393
Gross Block
98,12,21,831
Less: Depreciation
300,34,09,562
Net Block
198,56,63,248
498,90,72,810
INVESTMENTS
86,24,11,900
35,30,33,377
Inventories
41,35,39,323
Sundry debtors
11,86,08,237
56,98,39,851
Loans and Advances
145,50,20,788

102,90,32,147
42,59,88,641
---627,74,73,35181,447
Total

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.12.2011
Particulars
Schedule No.
2005
INCOME
Sales
385,65,72,118
(Increase/decrease) in Stock
-1,60,57,823
Total Income
384,05,14,295
EXPENDITURE
Manufacturing Expenses
Cost of trading goods

153,07,01,345
---
Page 100
Funds Flow
Statement Analysis
Central Excise Duty
69,86,42,442
Sales Tax
55,90,24,763
Administrative and Selling Expenses
Interest and Finance Charges

Depreciation
58,82,88,777
14,43,46,417
11,88,30,197
Miscellaneous Expenditure Written off
Total Expenditure
22,32,340
364,20,66,281
Profit for the year
Provision for taxation
Profit after Tax

Deferred Tax for the year
19,84,48,014
152,54,699
18,31,93,315
3,89,50,042
Fringe Benefit Tax for the year
-----------
Prior period expenditure
11,56,849
Profit available for appropriations
14,30,86,424
Transfer to General Reserve
-----------
Proposed Dividend
-----------
Tax on Dividend
Profit brought forward from previous
-----------56,76,50,645
year
Goodwill on Merger written off
-1,98,40,834
Profit Carried to Balance Sheet

N
69,08,96,2351,447

Particulars
Schedule No.
2006
Sales
452,87,19779
-98,74,875
INCOME
Total Income
451,88,44,904
EXPENDITURE
Page 101
Funds Flow
Statement Analysis
188,52,41,099
32,67,699
Central Excise Duty
81,46,64,469
Sales Tax
62,30,34,491
68,09,34,484
9,96,49,474
Depreciation
12,47,85,177
Total Expenditure
10,76,442
423,26,53,335
Profit for the year
28,61,91,569
2,24,41,139
Profit after Tax

26,61,91,569
10,08,85,372
-------------
27,41,325
16,01,23,733
-----------
Proposed Dividend
------------
Tax on Dividend
Profit brought forward from previous year
-----------69,08,96,235
----------

N
85,10,19,968447

Particulars
Schedule No.
2007
Sales
640,97,93,371
2,96,92,824
INCOME
Total Income
643,94,86,195
EXPENDITURE
Page 102
Funds Flow
Statement Analysis
241,01,65,622
67,40,11,176
Central Excise Duty
95,80,88,420
Sales Tax
63,36,87,866
118,57,25,154
9,99,66,070
Depreciation
14,54,84,437
Total Expenditure
2,50,800
610,73,79,545
Profit for the year
33,21,06,650
7,51,17,114
Profit after Tax

25,69,89,536
1,55,69,387
17,33,786
45,05,648
23,51,80,715
-----------
Proposed Dividend
------------
Tax on Dividend
Profit brought forward from previous year
-----------85,10,19,968
-------------

N
108,62,00,683

Particulars
Schedule No.
2008
Sales
914,46,59,562
3,74,11,258
INCOME
Total Income
918,20,70,820
EXPENDITURE
Page 103
Funds Flow
Statement Analysis
311,40,33,391
5,55,30,769
Central Excise Duty
114,28,05,092
Sales Tax
94,83,24,696
197,79,88,742
13,47,58,957
Depreciation
15,59,73,434
Total Expenditure
89,747
752,95,04,820
Profit for the year
165,25,65,992
50,76,18,003
Profit after Tax

114,49,47,989
10,49,68,144
22,35,543
1,68,20,163
102,09,24,139
15,00,00,000
Proposed Dividend
13,38,00,000
Tax on Dividend
Profit brought forward from previous
108,62,00,683
year
-----------
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Funds Flow

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Funds Flow

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Funds Flow

Moxie IT India Pvt Ltd.

Moxie IT India Pvt Ltd.

Moxie IT India Pvt Ltd.

Moxie IT India Pvt Ltd.

There is a general recognition in industry and business and among

Moxie IT India Pvt Ltd.

FUNCTIONS OF FINANCIAL MANAGEMENT

Moxie IT India Pvt Ltd.

Current assets management, which affects a firms liquidity, is an important

Meaning of Flow of Funds

NEED FOR STUDY

Moxie IT India Pvt Ltd.

SCOPE OF THE STUDY

This funds flow statement is a statement which indicates various means by

Moxie IT India Pvt Ltd.

It should remember that a funds flow statement is not a substitute of an income

It cannot reveal continuous changes.

Moxie IT India Pvt Ltd.

PARTIES INTERESTED IN FINANCIAL ANALYSIS

Moxie IT India Pvt Ltd.

Is the firm in a position to meet its current obligations?

What sources of long-term finance are employed by the firm?

How efficiently does the firm use its assets?

Are the earnings of the firm adequate? etc.,

Significance of Financial Analysis

To know the operational efficiency of the business.

Helpful in measuring the solvency of the firm.

Helpful in comparison of past and present results.

Helps in measuring the profitability.

Moxie IT India Pvt Ltd.

It is more helpful in inter-firm comparison.

Helps in judging the solvency of the undertaking.

Significance of Funds Flow Statement

1.Decisions relating to financing:

1.Reveals the reasons for financial difficulties:

Moxie IT India Pvt Ltd.

Useful as control device:

Useful to the external parties:

Moxie IT India Pvt Ltd.

1. Historical data: Analysis of the financial statements indicates about the

prices of commodities are different. Changes in price affects cost of production,

6. Financial Statements and Funds Flow Statement:

Moxie IT India Pvt Ltd.

By preparation of common size statements of the two similar units.

Moxie IT India Pvt Ltd.

By preparing common size statement of different years of the same

Comparison of the financial statements of different years of the same

Comparison of financial statement of a particular year of different

Comparative Statement Analysis.

Common-size Statement Analysis.

Funds flow Analysis.

Moxie IT India Pvt Ltd.

Cash flow Analysis.

Comparative Statement Analysis

Common-size Statement Analysis

State the total of the statement as 100 percent.

Compute the ratio of each item to the total in the statement

Moxie IT India Pvt Ltd.

There are two types of common-size statements, viz., common-size income

Selection of the base year.

Assignment of an index number of 100 to each item of the base year.

Calculation of percentage relationship that each item bears to the

We may classify them into the following categories: