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Many business owners disregard the importance of Funds flow statements because they unwittingly believe that their current financial standing can be construed from other financial reports and projections.Unfortunately, however, a Funds flow statement is necessary to adequately assess the incoming and outgoing flow of Funds and other resources in a business.Not only will a business owner with a Funds flow system be more aware of his or her financial standing, but it will also help investors to make educated decisions on future investments.A business with regular and reliable Funds flow statements shows more economic solvency, and is more attractive to investors.A Funds flow statement documents the incoming and outgoing Funds in plain terms.Future sales and sales made for credit (unless they have been paid off) are not included in the Funds flow statement, and most of the data will come from core operations.Payables and receivables should be expressly defined, as should depreciation of product value and inventory that has not yet been moved.This will allow a business owner to compare past periods with the current financial standing and determine whether your receivables have increased or decrease
Srinivas et al. (Sat,) studied this question.