Cash Flow Statement : Statement showing changes in inflow & outflow of cash during the period.

Methods of cash flow: 1.Direct Method : presenting information in Statement of A. operating Activities B. Investment Activities C.Financial Activities 2.Indirect Method :uses net income as base & make adjustments to that income(cash & non-cash)transactions. Funds Flow Statement :Statement showing the source & application of funds during the period. Major Difference: The Cash Flow S tatement allows investors to understand how a company's operations are running, where its money is coming from, and how it is being spent. Fund Flow Statement is showing the fund for the future activites of the Company.

funds flow statement refers the firm who to rise and how to spend the funds, cash flow refers the who to bring the cash and who to expense the cash. fund flow statement showing the changes of financial position of a certain period of time. on the other hand cash flow statement shown inflow and outflow of cash of a particular period of time. cash flow statement focuses attention on cash where as funds flow statement focuses attention on working capital" A cash flow statement cannot be prepared from fund flow statement but fund flow statement can be prepared from cash flow statement under inderect method.

ACCOUNT is the detailed record of a particular asset, liability, owners' equity, revenue or expense. FINANCIAL ACCOUNTING is the area of accounting concerned with reporting financial information to interested external parties
Accounts is material stock statements ant material Accounting Finance is Distribute the cost

Accounting is concerned with the recording of transaction in a systematic manner.As such, it is concerned with recording the business event in a monetary form whether the cash is involved or not at the time of recording the business transaction.

Example: Consider a situation where a firm has bought material for 50,000 on 01.01.2007. This amount is to be paid after 30 days from the date of purchase to the supplier on 31.01.2007. In this though money is not spent on 01.01.2007, the transaction is recorded in the books of accounts. Accounting functionalities involve, 1.Recording of transactions (Online transactions, Journal vouchers) 2.Checking the prime books (Cash book, Journals and Bank book) 3.Generating financial statements (P&L and B/S).

Finance is concerned with raising of funds to meet the various cash flow needs of the organization. Finance functions starts from gathering the cash flow information from the accounting records and also prepare projections of cash flow. Finance activities are concerned with preparing budgets and compare the same with the actual results for finding variances. Here, the sources and application of funds are prepared for both the budgets and actual scenarios. Finance functionalities involve, 1. 2. 3. 4. Bank co-ordination, Sourcing and Application of funds, Preparing Budgets and MIS and EIS reporting.

Finance activities will encompass through the Accounting and Operations aspects of an organization

Accounts is mainly for outsiders i.e.shareholders, creditors,debtors and for borrowing entities.It is prepared mainly for raising funds and for tax purpose. Finance is mainly prepared for management

purpose. It is useful tool for management at time of preparing budget,cost allocation,cost reduction,etc. It is for managing the funds of the company - Source and Application.

Acconts are managerial level it includes recording, classifing, summerising the results to the stake holders of the company. Finance deals with the admisterial level it includes various decisions like procurement of funds, invest them in proper manner, and distributing of funds to interested parties.

The main difference between accounts and finance is the accounts calculate the cash flow on the basis of accrual basis, means the mercantile basis. Finance consider only when they are received. Accounts is the only input to finance

Accounts is maintaining day to day transactions and Finance is managing Fund flow. Both needs to report day to day dealings to the Management for betterment & future course of action. Both are interlinked like two pillars of cart.

Definition of 'Capital Budgeting'

The process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing. Oftentimes, a prospective project's lifetime cash inflows and outflows are assessed in order to determine whether the returns generated meet a sufficient target benchmark. Also known as "investment appraisal."

Definition of 'Net Present Value - NPV'

The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. NPV analysis is sensitive to the reliability of future cash inflows that an investment or project will yield.

Definition of 'Internal Rate Of Return - IRR'

The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as "economic rate of return (ERR)." Rea In more specific terms, the IRR of an investment is the discount rate at which the net present value of costs (negative cash flows) of the investment equals the net present value of the benefits (positive cash flows) of the investment. The internal rate of return on an investment or project is the "annualized effective compounded return rate" or "rate of return" that makes the net present value (NPV as NET*1/(1+IRR)^year) of all cash flows (both positive and negative) from a particular investment equal to zero.

A valuation ratio of a company's current share price compared to its per-share earnings. Calculated as: Market Value per Share Earnings per Share (EPS)

Definition of 'Earnings Per Share - EPS'

The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Calculated as:

Definition of 'Ratio Analysis'

A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.

Definition of 'Debt/Equity Ratio'

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity. It indicates what proportion of equity and debt the company is using to finance its assets.

Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the calculation. Also known as the Personal Debt/Equity Ratio, this ratio can be applied to personal financial statements as well as corporate ones.

Investopedia explains 'Debt/Equity Ratio'

A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially generate more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as more earnings are being spread among the same amount of shareholders. However, the cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities and become too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing. The debt/equity ratio also depends on the industry in which the company operates. For example, capital-intensive industries such as auto manufacturing tend to have a debt/equity ratio above 2, while personal computer companies have a debt/equity of under 0.5.