Differences between Funds Flow and Cash Flow Statement

These are the basic differences between Funds Flow and Cash Flow Analysis

Basis of Differences

Funds Flow Statement

Cash Flow Statement

Object The objective of preparing funds flow statement is to gather information with regard to an enterprise’s ability to meet its long-term liabilities. The objective of preparing cash flow statement is to gather information with regard to an enterprise’s ability to meet its short-term liabilities.
Dependence Funds flow statement can be prepared with the help of cash flow statement. Cash Flow Analysis can’t be prepared with the help of funds flow statement only. It depends upon working capital,funds flow.
Nature of Statement  It states the changes in working capital It states the changes in cash position.
Opening Balance There is operating balance of cash in hand in the preparation of funds flow statement. It is prepared with the opening balance of cash in hand.
Difference of Sides Difference between both the sides of funds flow statement is either the increase or decrease in working capital.  Difference between both the sides of cash flow statement is the closing balance of cash.
Additional Statement Preparation of funds flow statement is necessarily followed by the preparation of an additional statement,viz.schedule of changes in working capital. Preparation of cash flow statement is not followed by the preparation of any additional statement.
Planning Funds flow statement facilitates long term planning of an enterprise. Cash flow statement facilitates short term planning of an enterprise.
Period  Preparation of funds flow statement is for a longer period Preparation of cash flow statement is for a shorter period.