Differences Between Cash Flow and Fund Flow

Cash Flow and fund flow are completely different statements that have varied scopes and serve different purposes.

• Cash flow statement is one of the four important financial statements every investor should look at and it is quite prevalent and useful when one wants to know about the liquidity position of a company.
• On the other hand, fund flow statement talks about the financial position of a company in a given period of time. It talks about sources of funds and application of funds.

In this article, we will look at the comparative analysis between Cash Flow and Fund flow so that we can get an idea about cash flow and fund flow statements and how useful they’re in practical situations.

Cash Flow vs Fund Flow Infographics

There are various differences between cash flow and fund flow. Let’s have a look –

Cash Flow and Fund Flow Differences

There are many differences between cash flow vs fund flow. But the key differences are articulated below –

• Cash flow statement is one of the four financial statements that every investor looks at to understand the financial position of a company. Fund flow statement, on the other hand, isn’t a financial statement.
• Cash flow statement is prepared so that at the end of a particular period the net cash flow of the company can be computed. Fund flow statement is prepared to see the sources and uses of funds during a particular period and how that “change in the funds” affects the working capital of the company.
• Cash flow statement is created by following cash basis of accounting. Fund flow statement, on the other hand, is created by following accrual basis of accounting.
• Cash flow statement is used for cash budgeting. Fund flow statement is used for capital budgeting.
• Cash flow statement is prepared to see the short-term effect of cash flow. Fund flow statement is prepared for the long-term purpose.

Comparison between Cash Flow and Fund Flow ( Table)

Conclusion

If we compare between cash flow and fund flow, cash flow is more prevalent among investors and more used. But if we look at separately, we will see that both of them serve a meaningful purpose.

Cash flow serves a company and its investors and potential investors by showing exactly how much cash is getting injected into the company and how much cash is being paid. On the other hand, fund flow statement helps a company set up a capital budget and take necessary steps regarding the specific items which affect the “sources & uses of funds” in the company.

Recommended Articles

This has been a guide to the key differences between cash flow vs fund flow statements along with infographics and comparative charts and table. You may also have a look at the following articles to learn more about accounting –

• Cash Flow vs Free Cash Flow Differences
• Cash Flow Analysis
• Cash flow vs Net Income | Key Differences
• Cash Accounting vs Accrual Accounting
• Basic Accounting tutorial 

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