My Ssec Capstone Project A COMPARATIVE STUDY OF FUND FLOW ANALYSIS WITH REFERENCE TO SELECTED COOPERATIVE SUGAR FACTORIES Desavale A

A COMPARATIVE STUDY OF FUND FLOW ANALYSIS WITH REFERENCE TO SELECTED COOPERATIVE SUGAR FACTORIES Desavale A

A COMPARATIVE STUDY OF FUND FLOW ANALYSIS WITH REFERENCE TO SELECTED COOPERATIVE SUGAR FACTORIES
Desavale A. H.

Research Student Shivaji University, Kolhapur.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

ABSTRACT
Today’s competitive business environment management, investor, banker etc. does not take quick decision because evaluate the business performance it is a crucial for everyone. Hence we need of some techniques and methods to do analysis of business performance. According to financial statement we find out the sum of financial position of business. It is limited source to analyze business performance. Fund flow statement it is a good source which is help to analyze business performance. The fund flow statement analyzes how much fund sources available for business and how much application of fund is available. In the fund flow analysis we firstly calculate changes in working capital then adjusted profit and loss account and finally we prepare fund flow statement.

Keywords:
Fund, Flow of fund, Definition, Changes in working capital, adjusted profit and loss account, fund flow statement.

1. INTRODUCTION
Today, every organization prepares the financial statement. The financial statements find out Gross profit or Gross loss, Net profit or Net loss and also find out soundness of a firm as particular period of time or date. The financial statement they do not show changes in financial position, hence we need to determine or evaluate the sources and application of fund for the purpose of future course of action. Management, investor and creditors etc. want to determine fund flow statement for taking the best decision of the firm.
2 Concepts
The term ‘fund’ has a variety of meaning such as narrow sense ‘Cash Fund’, as broader sense ‘Capital Fund’ and as popular sense ‘Working Capital Fund’.

a) Cash fund means in a narrow sense only ‘Cash’. Fund flow statement prepared on the basis
of Cash Flow Statement because of various business transaction on cash and takes into
account receipts and disbursement of cash.

b) Capital fund means all financial resources, used in business whether in the form of men,
material, money, machinery and others.

c) Working capital fund means i.e. the excess of current assets over current liabilities.

Meaning of ‘Flow of fund’
Flow of fund means movement of funds. For instance, incoming of funds from different sources and their outgoing e.g. purchase of fixed asset etc. Thus, a flow of fund effect on working capital, in other words flow of fund refers to increase and decrease of net working capital.

Meaning and Definition Fund Flow Statement
Fund Flow statement is a method which will be used for study of changes in the financial position of a business enterprise between beginning and ending financial statements dates. It is a statement of sources and application of fund for a period of time.

“A statement of sources and application of funds is a technical device designed to analyse the changes in the financial condition of a business enterprise between two dates”- Foulke3. Objective of the Study
Primary Objective
A comparative study of Fund Flow Analysis with reference to selected cooperative sugar factory.

Secondary Objective
1 To study the changes in the working capital.

2 To study of sources and application of fund.

3 To prepare fund flow statement.

4 To give suitable suggestion
4. Scope and Limitation of the Study
The scope of the study is limited. The Researcher has select only two factories for study. This study has been covered only 2013-2014 and 2014 to 2015 years. The researcher covers all the components current assets and current liabilities for the year 2013 to 2015. The study purely depends upon secondary data.
5. Research Methodology
This study utilized analytical research technique for analysis of data and future actions can be made. We generally use for research purpose primary data source and secondary data source used. But for this research researcher used only secondary data for the data collection. The secondary data has collected from annual reports and websites etc.

5.3 Sample Design
The researcher two sugar factories selected for study. These are
A)  Padmabhushan Krantiveer Dr. Nagnathanna Nayakawadi  Hutatma Kisan Ahir Sahakari Sakhar Karkhana Ltd., Nagnathannanagar (Walwe)
B) Rajarambapu Patil Sahakari Sakhar Karkhana. Ltd., Rajaramnagar (Sakharale)
6. Data Analysis and Interpretation
A) Padmabhushan Krantiveer Dr. Nagnathanna Nayakawadi  Hutatma Kisan Ahir Sahakari Sakhar Karkhana Ltd., Nagnathannanagar (Walwe)
No.6.1
Schedule of changes in working capital
Particulars 2014
Rs. 2015
Rs. Changes in
W. C. Increase (Rs.) Changes in W. C. Decrease(Rs.)
         
Current Assets        
Cash ; Bank Balances        
Cash 3240198 118597   3121601
Cash (DD) 2037600 0   2037600
Bank 89606413 10562378   79044035
Stores ; Spares 28480746 26643819   1836927
Sugar ; Byproduct 1633268770 1656993539 23724769  
Advances        
Advances 33973969 52422841 18448872  
Security Deposit 14273001 23382090 9109089  
Other Receivables 57534783 1012622902 955088119  
Total Current Assets (A) 1862415480 2782746166    
Less Current Liabilities        
Government Payable 1888377 1820586 67791  
Sugar bills payable 87516367 60672470 26843897  
Other Liability 304478960 1139463309   834984349
Provisions 157897890 93354404 64543486  
Total Current Liabilities (B) 551781594 1295310769    
         
  1310633886 1487435397 1097826023 921024512
         
Increase in Working Capital 176801511     176801511
  1487435397 1487435397 1097826023 1097826023
The net increase in working capital for the year 2014 – 2015 Rs. 176801511. It means this sugar factory funds are invested in the working capital and it should be posted at “Application” side of Fund Flow statement.

Table No. 6.2
Adjusted Profit ; Loss Account
Particulars Rs. Particulars Rs.

       
To Reserve 28013085 To Balance b/d 6014764
       
To Balance c/d 9339125 To fund From Operation (Operating profit) 31337446
       
  37352210   37352210
The fund from operation for the year 2014-2015 is Rs 31337446.

Table No.6.3
Fund Flow Statement
Sources/ Inflow Rs. Application/ Outflow Rs.

       
fund From Operation 31337446 Unsecured Loan repaid 6653890
Issue of share 6324583 Fixed Assets purchased 19824835
Security Loan taken 254844136 Investment in Assavani Project 1986492
Deposit from shareholder 12043446 Increase in Working Capital 176801511
  Investment purchased 99282883
  304549611   304549611

It is highly invested in fixed asset, unsecured loan, and investment. Secured loan and deposit are main sources of income for this factory.

B) Rajarambapu Patil Sahakari Sakhar Karkhana. Ltd.,Rajaramnagar (Sakharale)
Table No.6.3
Schedule of changes in working capital
Particulars 2014
Rs. 2015
Rs. Changes in W. C. Increase (Rs.) Changes in W. C. Decrease(Rs.)
Current Assets        
Cash ; Bank Balances        
Cash 200 200 0.00  
Bank 148833147 284624608 135791461  
Stores ; Spares 5990582671 6514537377 523954706  
Advances        
Advancs5835764 17159264 11323500  
Deposit 78160677 100440382 22279705  
Other Receivables 646192517 792798477 146605960  
Prepaid 18101671 17423771   677900
Total Current Assets (A) 6887706647 7726984079    
Less Current Liabilities        
Government Payable 109071763 137954264   28882501
Sugar bills payable 211208208 168811641 42396567  
Other Liability 857605388 681857633 175747755  
Provisions 1019375000 1448464389   429089389
Total Current Liabilities (B) 2197260359 2437087927    
         
  4690446288 5289896152 1058099654 458649790
         
Increase in Working Capital 599449864     599449864
  5289896152 5289896152 1058099654 1058099654
The net increase in working capital for the year 2014 – 2015 Rs. 599449864. It means this sugar factory funds are invested in the working capital and it should be posted at “Application” side of Fund Flow statement.

;
Table No.6.4
Adjusted Profit ; Loss Account
Particulars Rs. Particulars Rs.

       
To Reserve 79508523 To Balance b/d 214819361
       
To fund lost in Operation (Operating Loss) 702366107  
    To Balance c/d 567055269
  79508523   79508523
The fund lost in operation for the year 2014-2015 is Rs 702366107.

Table No.6.5
Fund Flow Statement
Sources/ Inflow Rs. Application/ Outflow Rs.

Issue of share 278113 Fixed Assets purchased 293027902
Secured Loan taken 1568377446 Increase in Working Capital 599449864
Income of Irrigation scheme 27810402 Investment Purchased 3000000
Unsecured Loan taken 2686458 Deposit from shareholders repaid 1308546
Fund lost in operation 702366107
      1599152419   1599152419
It shows that this sugar factory highly invest in fixed assets hence application of fund increased. Secured loan and Income of Irrigation scheme are sources of income.
7. Findings
1. The Huttatma sugar factory net increase in working capital for the year 2014 – 2015 Rs.
176801511. The Rajarambapu Patil sugar factory net increase in working capital for the
year 2014 – 2015 Rs. 599449864.

2. The Huttatma sugar factory fund from operation for the year 2014-2015 is Rs 31337446.

The fund lost in operation for the year 2014-2015 is Rs 702366107.

3. Huttatma sugar factory highly invested in fixed asset, unsecured loan, and investment.
Secured loan and deposit it is main source of income for this factory. Rajarambapu Patil
sugar factory highly invest in fixed assets. Secured loan and Irrigation return it is a best
source of income for this factory.
8. Suggestions
Hutatama cooperative sugar factory investment in Assavani Project but not display source of inflow hence researcher suggest that this project generate the income.

Rajarambapu Patil cooperative sugar factory provision will be deceased as compare to previous year hence researcher suggest that this provision can be made for more in future. Other receivable also increased that this receivable are not good for sugar industry hence slowly control of receivables.

9. Conclusion
Fund Management is a crucial work for the point of view manager. As a manager has to ensure that available fund is being used for most productive purpose. If he fails to manage of fund then business is going to lose, low productivity. Fund flow statement analysis is the technique which is monitors the sources of fund and application of fund.

From the comparative study of fund flow analysis with reference to selected cooperative sugar factory, the researcher conclude that fund management it’s depend on working capital. These two sugar factories properly managed working capital. Secured loan is a major source of fund for cooperative sugar factories.
10. References
Reports
Annual report on Padmabhushan Krantiveer Dr. Nagnathanna Nayakawadi  Hutatma Kisan Ahir Sahakari Sakhar Karkhana Ltd., Nagnathannanagar (Walwe) and Rajarambapu Patil Sahakari Sakhar Karkhana. Ltd., Rajaramnagar (Sakharale)
Books
BIBLIOGRAPHY l 1033 Jagtap, Subhash. Practice in Advanced Costing and Management Accounting. first. Nirali Prakashan, 1992.

Maheshwari S. N., Advanced Accountancy, Vikas Publishing, 2004.

Journal
Peter, Tanya Gupta and Magdalene. “A Study on Fund Flow Management with Reference to Integrated Support and Allied Services Pvt. Ltd.” Indian Journal of Science and Technology 8 (2015): 32.

SRIKANTH, V. “An Empirical Study of Financial Performance Evaluation Throw Cash Flow Statement of an Indian Manufacturing Company.” International Journal of Arts and Science Research 1 (1) (2014): 49-56.

x

Hi!
I'm Ava

Would you like to get a custom essay? How about receiving a customized one?

Check it out