Interested parties of funds flow statement

Generally, the following parties are interested over the funds flow statement.

Parties interested in funds flow statement

  1. Management,
  2. Owners of Shareholders,
  3. Banks and Financial Institutions and;
  4. Employees.

1. Management: Management wants to know the extent sources of funds and the ways of utilizing the sources. On the basis of the funds flow statement, the management can review the functional budgets particularly cash budget. Management is also interested in estimating the magnitude to which working capital has been used effectively and to facilitate their financial policy decisions like payment of dividend, investment made in shares, debentures etc and approval of capital budgeting proposals. Moreover, the management can find out the alternative long range financial plans and estimate the financial requirements for long period.

2. Owners or Shareholders: Shareholders are the real owners of the company who can assess whether dividend is available at reasonable rate or not. They can evaluate the business whether the company is in a position to meet its present liabilities in time. The financial management practices of the management people can be understood by the shareholders.

3. Financial Institutions & Banks: Banks and financial institutions can get meaningful information about the level of risk involved in granting credit to the company on seeing the funds flow statement. The effective use of available funds is identified by the banks and financial institutions.

4. Employees: The job security of the employees is based on the profitability and growth of the company. A company can increase its profitability by effective use of available funds thereby there is a possibility of growth. Hence, the employees can find the effective fuse of available funds by the management during a particular period on seeing the funds flow statement. The funds should be managed in such a manner that the position of business should be in a position to make payment of salaries to the employees in time in addition to meeting other expenses.

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