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1) Identify them as sources and applications of funds, and arrange them in a proper manner with the Sources of funds on the left and the Applications on the right of a tabulated statement for the said period. Given below are some different sources and applications of funds finance items purposely scattered for an Agribusiness Company K for the year ended 31 December 19X8. By studying the CFS, an investor can get a clear picture of how much cash a company generates and gain a solid understanding of the financial well-being of a company. These figures can also be calculated by using the beginning and ending balances of a variety of asset and liability accounts and examining the net decrease or increase in the accounts.<\/p>\n<\/p>\n
However, that\u2019s not always a bad thing, as it may indicate that a company is making investments in its future operations. Although cash flow statements have now superseded statements of source and application of funds, funds flow statements may not disappear entirely. Some businesses or industries will continue to find fund flow statements useful and informative. Yes, a company can show profits on its income statement but still face cash flow issues if it fails to collect receivables or has significant cash outflows that exceed inflows. From this CFS, we can see that the net cash flow for the 2017 fiscal year was $1,522,000. The bulk of the positive cash flow stems from cash earned from operations, which is a good sign for investors.<\/p>\n<\/p>\n
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Operating activities include the production, sales and objectives of cash flow statement<\/a> delivery of the company’s product as well as collecting payment from its customers. This could include purchasing raw materials, building inventory, advertising, and shipping the product. C) Repairs costs are principally variable costs incurred on assets because of the level of use of the assets through wear and tear.<\/p>\n<\/p>\n(h) Helps the Management to Ascertain Cash Planning:<\/h2>\n<\/p>\n