Sources and Uses of Funds Statement, Steps in Creating, Adjustment, Analyzing the sources and uses of funds statements with example

 Sources and Uses of Funds Statement

                  “It is a summary of a firm’s changes in financial position from one period to another”. It is also called flow of funds statement or a statement of changes in financial position.

 

Sources and Uses of Funds Statement

Funds

The term flow means movement and includes both inflows and outflows of resources. It includes all of the firm’s investments and claims (against those investment) allow us to capture all of transections as both sources and uses of funds.

Sources

Where the money for all funding is going to come from or The money needed for various purposes for business startup.

 

Steps in Creating a Sources and Uses of Funds Statement

We prepare a basic, bare-bones funds statement

1: determining the amount and direction of net balance sheet changes _an increase (+) or decrease(-) that occur between two balance sheet dates.

2: classifying net balance sheet changes as either sources or uses of funds ass follow

Sources of Funds

·         Increase (+) in a Claims Item (i.e., liability or shareholder’s equity item)

·         Decrease(-) in an Asset Item

Uses of funds

·         increase (+) in an Asset Item

·         Decrease(-) in a Claims Item (i.e., liability or shareholder’s equity item)

 

3: consolidating this information in a source and uses of funds statement format

For example

Comparative balance sheet with sources and uses of funds {1.a:  self_correction problem}

                                                                                                                                                                          Thousand  $

Asset	Year 1	Year 2	Direction of change	source	Use
Cash	53,000	31,000	-	22,000
Marketable securities	87,000	0	-	87,000
Account receivable	346,000	528,000	+		182,000
Inventories	432,000	683,000	+		251,000
Current assets	918,000	1,242,000
Net fixed assets	1,113,000	1,398,000	+		285,000
Total	2,031,000	2,640,000
Accounts payable	413,000	627,000	+	214,000
Accrued expenses	226,000	314,000	+	88,000
Bank borrowings	100,000	235,000	+	135,000
Current liability	739,000	1,176,000
Common stock	100,000	100,000
Retain earnings	1,192,000	1,364,000	+	172,000
Total	2,031,000	2,640,000		718,000	718,000

 

Adjustment

 A few minor adjustments will provide us with an even more useful  statement with which to work. For adjusting change in retain earnings and that in net fix assets. We need to

Recognize the profit and earning 

where, net profit as a source of funds and cash dividends as a use of funds. Giving individual recognition to profit (or loss) and dividends paid provides important added funds detail with a minimum effort.

 Recognize the depreciation and gross change in fix assets

What we really want to know  is something called funds provided by operations_ something usually not expressed directly on income statement.

Besides helping us derive funds provided by operations adding back depreciation as a  some of funds allow us to explain the gross addition (or reduction) to fixed as opposed to merely the change in net fixed assets.

For example

As for the above example the depreciation for 2020 was 189,000 then,

                                                                                                                                                                             Thousand  $

Source		Uses
Funds provided by operations		Addition to fix assets
Net profit (retained earnings)	172,000	Fix assets	285,000
Depreciation	189,000	Depreciation	189,000
	361,000		474,000
Decrease , marketable securities	87,000	Increase , account receivable	182,000
Increase ,  account payable	214,000	Increase , inventories	251,000
Increase ,  accrued expenses	88,000
Increase ,  bank borrowings	35,000
Decrease , cash	22,000
	907,000		907,000

 

Analyzing the sources and uses of funds statements

The analysis of funds statements give us insight into the financial operations of a firms. An analysis of major sources of funds in the  past reveals what portion of firm’s growth were financed internally  and externally.

Funds statement are also very useful in judging whether the firm expanded at too fast a rate and whether, the firm’s financing capability is stained etc.

For example

From the above information we can analyze that

The company has had substantial capital expenditures and increases in current assets. This growth has far outstripped the growth in retained earnings. To finance this growth, the company has reduced its marketable securities to zero, has leaned heavily on trade credit (accounts payable), and has increased its accrued expenses and bank borrowings. All of this is short-term financing of mostly long-term buildups in assets.

Organic food marketing in Pakistan and it’s potential, Principles of Marketing, organic food in pakistan

Today’s life is very competitive, challenging and demanding. Consumers are very much concerned about their health and the food choice to stay healthy. A health concern has influenced the consumer attitude toward organic food.

When one talks about healthy eating, the first word that comes to mind is ‘organic’, a trend that is increasingly becoming popular among Pakistanis.

For Pakistanis, opting for organic food doesn’t mean that we are being fashionable or following Western fads; it mean that we’re going back to the basics. Organic food is not an alien concept for us. Our forefathers were all organic farmers and used natural fertilizers and natural methods of pest control.

In modern times, organic farming entails the use of organically approved pesticides and fertilizers to maintain soil productivity and control pests. Organic farmers employ methods like crop rotation, green manuring, and use compost that is made by the farmers themselves.

Organic products market

Organic products have premium market which make not available to the whole

population due to prices constraints. Some consumers are ready to pay more for food that has superior quality. Consumer demand for organic products is gradually increasing due to concern about the environments and health implications of industrial agriculture although there is no relation between consumer and producer but the poor financial performance of organic farming reflects the financial problems of small farmers in some cases due to lack of access to premium market helps. Such difficulties have forced out from the business the small organic farmers.

It is possible that organic farmers market their products directly but it requires more  labour and organisation. Organic food are supplied to supermarket also provide home delivery. Seasonal production and regional markets remain an important objective in organic farming. We have to maintain National Organic Standards Board to decide the criteria of what is organic? International movements (IFOAM) has formulated basic standards to define organic production. Food containing products of gene technology should be labelled, so consumer have an option, Bioethics influences the marketability

of products derived from biotechnology.

It is the consumers who decide on the prospects of biotechnological markets. Organic food should be labelled that consumer products not derived from genetically engineered varieties.

In Pakistan the choices are limited. This is where the “Khalis Food Market” truly stands out as one of the few avenues promoting organic produce and consequently a healthier lifestyle in Pakistan.

Potential for Organic Farming in Pakistan

• If proper planning and fore sighted measures are timely taken, Pakistan has one of the greatest potential among the developing countries.

• Millions of acres of highly fertile and productive-virgin lands under the command of five mega dams Akhori, Bhasha-Diamer, Kalabagh, Kuramtangi and Munda to be built by 2016 at a cost of $ 25 billions can be the potential areas for delineation as ‘organic farming’ areas.

• The ‘organic farming’ will have a direct impact to alleviate poverty by providing large scale employment to unskilled semi-skilled labor.

• Pakistan’s current export earnings from vegetables and fruits to Europe and neighbouring countries stand at 115.6 million dollars during 01. With domestic environment conducive to producing organic vegetables, fruits and livestock products, Pakistan can be introduced as a supplier of organic food items by launching a powerful marketing campaign in international market.

Domestic Violenc Domestic violence is violence committed by someone in the victim’s domestic circle

 

Domestic Violence

‘’Domestic violence is violence committed by someone in the victim’s domestic circle ’’

The term ‘domestic violence’ is used when there is a close relationship between the offender and the victim. There is usually a power gap between them.

 

Jack Ashley was the first man who  use of the term domestic violence in a modern context in 1973 and according to him domestic violence means ‘’ violence in the home’’

Traditionally, domestic violence was mostly associated with physical violence but Domestic violence is not physical violence alone. Domestic violence is any behavior the purpose of which is to gain power and control over a spouse, partner, girl/boyfriend or intimate family member physically  and psychologically both

 Abuse is a learned behavior; it is not caused by anger, mental problems, drugs or alcohol, or other common excuses.

 

 

It is a worldwide issue . Globally, the victims of domestic violence are increasing

 

A purple ribbon to promote awareness of domestic violence

 

October is National Domestic Violence Awareness Month, which first began in 1981 by the National Coalition Against Domestic Violence (NCADV)