The sources and uses of fund statement is an accounting statement that summarizes the financial statement and financial plan. It shows the sources from which a business or a company obtains its cash and the uses to which this cash is put during a trading period.
Large companies and businesses include sources and uses of funds statement in their annual report. It is their way to show the lenders how much they need for a startup financial and how much collateral they will contribute. Creating sources and uses of fund statement is also one of the ways to strategize business financially.
Let us take a closer look at the sources and the uses of funds.
Sources of funds. The sources of funds is where all the money for funding is going to come from. For example, you may be providing furniture for your office, getting a loan to purchase equipment, or getting a line of credit for working capital.
Uses of funds. The money needed for various purposes for business startup. This includes:
The statement example in word of sources and application of funds shows the total sources of new funds that are generated between the balance sheet dates and the total uses of those funds in the same period. it is also made up of a list of the changes that occur in all of the Balance Sheet Items between any two balance sheet dates.
The statement of sources and application of funds will exactly tell where the company got their money from and detail how the money was spent. It also tells whether the management plan has made reasonable investment decisions.
As we have already learned in this article, there are two sections of the statement example in excel for funds: the sources and the uses. Here are the steps in creating the sources and the uses in the fund statement.