A sources and uses of funds statement template is a financial statement that summarizes the changes in a company’s financial position over a period of time. It shows where the company got its money from (sources) and how it used that money (uses). This information can be used to assess a company’s financial health and performance.
Sources and uses of funds statements are often used by investors, creditors, and other stakeholders to evaluate a company’s financial position. They can also be used by management to identify areas where the company can improve its financial performance.
There are many different ways to prepare a sources and uses of funds statement. However, the most common format is the “indirect method.” This method starts with the company’s net income and then adds back any non-cash expenses (such as depreciation and amortization) and subtracts any non-cash gains (such as the sale of fixed assets). The resulting figure is the company’s “cash flow from operating activities.”
Sources of Funds
The sources of funds section of a sources and uses of funds statement lists the various ways in which a company obtained financing during the period covered by the statement. Common sources of funds include:
- Operating activities: This is the cash flow generated from the company’s core business operations.
- Investing activities: This is the cash flow used to purchase or sell fixed assets, such as property, plant, and equipment.
- Financing activities: This is the cash flow used to raise capital, such as issuing stock or borrowing money.
The sources of funds section of a sources and uses of funds statement can be used to assess a company’s ability to generate cash from its operations and to identify potential areas for financial improvement.
Uses of Funds
The uses of funds section of a sources and uses of funds statement lists the various ways in which a company used its financing during the period covered by the statement. Common uses of funds include:
- Capital expenditures: This is the cash used to purchase or sell fixed assets, such as property, plant, and equipment.
- Dividends: This is the cash paid to shareholders as a return on their investment.
- Stock repurchases: This is the cash used to buy back shares of the company’s own stock.
- Debt repayment: This is the cash used to pay down debt.
The uses of funds section of a sources and uses of funds statement can be used to assess a company’s investment strategy and to identify potential areas for financial improvement.
Conclusion
Sources and uses of funds statements are a valuable tool for understanding a company’s financial position. They can be used to assess a company’s financial health and performance, and to identify areas where the company can improve its financial performance. Investors, creditors, and other stakeholders can use sources and uses of funds statements to make informed decisions about their investments.
There are many different ways to prepare a sources and uses of funds statement. However, the most common format is the “indirect method.” This method starts with the company’s net income and then adds back any non-cash expenses and subtracts any non-cash gains. The resulting figure is the company’s “cash flow from operating activities.”
