A

STUDY ON

FUNDS FLOW STATEMENT

With reference to

VIJAYA DIARIES PRIVATE LIMITED, NELLORE

A project report submitted to the

RVR & JC COLLEGE OF ENGINEERING (AUTONOMOUS)

In partial fulfillment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

E.SIVA KUMAR REDDY

Regd. No: Y20MS017

Under the Guidance of

Mr. P. SIDDARDHA

ASSISTANT PROFESSOR

DEPARTMENT OF MANAGEMENT SCIENCES

RVR & JC COLLEGE OF ENGINEERING (AUTONOMOUS)

Chowdavaram, Guntur-522019, Andhra Pradesh

2019-2021
 DEPARTMENT OF MANAGEMENT SCIENCES

RVR & JC COLLEGE OF ENGINEERING

Chowdavaram, Guntur.

CERTIFICATE

This is to certify that the project report titled "A STUDY ON FUNDS FLOW
STATEMENT With reference to VIJAYA DAIRIES , NELLORE " is a Bonafide
work done by E.Siva Kumar Reddy, Regd. No:Y20MS017,II MBA under my guidance &
submitted to the Department of Management Sciences, R.V.R. & J.C. COLLEGE OF
ENGINEERING (AUTONOMOUS),GUNTUR, in partial fulfillment of requirements for the award
of Degree of Master of Business Administration, during 2020-2022.

Mr. P.Siddardha Dr. T.Sreekrishna

Project Guide M.B.A. Lr.Ship (UGC), M.Phil,Ph.D.

Head, Dept. of MS

EXTERNAL EXAMINER
 DECLARATION

I E.SIVA KUMAR REDDY, student of Master of Business

Administration,R.V.R& J.C.COLLEGE OF ENGINEERING (AUTONOMOUS),GUNTUR.
I hereby declare that the project entitled "A STUDY ON FUNDS FLOW STATEMENT
With reference to VIJAYA DIARIES PRIVATE LIMITED, NELLORE " is a genuine
work done by me,during 2020-22.

The project report is prepared under the guidance of Mr. P.SIDDARDHA , Assistant
Professor in partial fulfillment of the requirements for the award of the Degree of
Master of Business Administration by Acharya Nagarjuna University, Guntur .

I hereby declare that, this is the result of my own efforts and it has not been submitted
to any other university for the award of any Degree or Diploma.

E.SIVA KUMAR REDDY

Regd.No:Y20MS017
 ACKNOWLEDGEMENT

The Successful completion of this report is made possible with the help
and guidance received from various quarters. I would like to avail this opportunity to
express my sincere thanks and gratitude to all of them.

I sincerely thank Principal Dr. A. SUDHAKAR for providing necessary

infrastructure and resources for the accomplishment of my project report in R.V.R. &
J.C. COLLEGE OF ENGINEERING, Chowdavaram, Guntur.

I would like to express my profound gratitude and sincere thanks to Dr.

T. SREEKRISHNA, Head of the Department of Management Sciences for his
valuable guidance and constant encouragement given to me during this project work.

I am deeply indebted to the supervisor P. SIDDARDHA, Assistant

Professor, Department of Management Sciences for his valuable guidance, constant
encouragement, constructive criticism and keen interest evinced throughout the course
of my project work.

I am very much thankful to all the faculty members of the MBA

department for their value based imparting of the theory and practical subjects related to
the project. Finally I have a notation to express my sincere thanks to my family
members, friends and all those who guided, inspired and helped me in the completion of
my project work.

(E.SIVA KUMAR REDDY)

SYNOPSIS
 INTRODUCTION

Firms create manufacturing capacities for production of goods: some provide services
to consumers. They sell their goods or services to earn profit. They raise funds to
acquire manufacturing and other facilities. Thus, the three most important activities of a
business firm are: finance, production and marketing. A firm secures whatever capital it
needs and employees it (finance activity) in activities which generate returns on
invested capital and marketing activities.

FUNCTIONS OF FINANCIAL MANAGEMENT:

The financial functions can be divided into four broad categories:

1. Investment decisions.
2. Financing decisions.
3. Dividend decisions.
4. Liquidity decisions.

1. Investment decision:

Investment decision or capital budgeting involves the decision of allocation of

capital or commitment of funds to long-term assets, which would yield, benefits in future.
It's one very significant aspect is the task of measuring the prospective profitability of
new investments. Future benefits are difficult to measure and cannot be predicted with
certainty.

2. Financing decision:

Financing decision is the second important function to be performed by the financial

manager. Broadly, he must decide when, where and how to acquire funds to meet the
firm's investment needs. The central issue before him is to determine the proportion of
equity and debt. The mix of debt and equity is known as the firm's capital structure. The
firm's capital structure is considered to be optimum when the market value of shares is
maximized.

3. Dividend decision:

Dividend decision is the third major financial decision. The financial manager must
decide whether the firm should distribute a portion and retain the balance. Like
The debt policy, the dividend policy should be determined in terms of impact on the
shareholder's value. The optimum dividend policy is one, which maximizes the market
value of the firm's shares.

4. Liquidity decision:

Current assets management, which affects a firm's liquidity, is an important finance

function. Current assets should be managed efficiently for safe guarding the firm against
the dangers of liquidity and insolvency. Investment in current assets affects firm's
profitability, liquidity and insolvency. Investment in current assets affects firm's
profitability, liquidity and risk. A conflict exists between profitability and liquidity while
managing current assets.

Financial analysis is the process of identifying the financial strengths and weaknesses
of the firm. It is done by establishing relationships between the items of financial
statements viz. balance sheet and profit and loss account. Financial analysis can be
undertaken by management of the firm or by parties outside the firm viz., owner's
creditors, investors and others.

Types of analysis:

1. Vertical analysis
2. horizontal analysis

Method of analysis:
Now the financial analyst may use one or multiple methods. financial analysis are:

i. Comparative statements.

ii. Common size statements.

iii. Trend analysis.

iv. Ratio analysis.

v. Funds flow analysis.

vi. Cash flow analysis.

vii. Cost-volume-profit analysis (cvp analysis).

NATURE AND SCOPE OF FINANCIAL MANAGEMENT:

 Financial management is a branch of business management, which is

associated with future planning. Organization, co-ordination and control.
 Financial management provides a sound base to all managerial decisions.
 Production, research and development decisions based on financial
management.
 Financial management is a scientific and analytical analysis.
 In the process of decision making and financial analysis modern mathematical
techniques are used. Managing a firm is both science and an art.
 An analysis of the various definitions mentioned above make it clear that
financial management is concerned with the proper management of funds
keeping in view the enterprise objectives:
 The financial manager should look after that the funds are procured the risk and
cost consideration are properly balanced and there is optimum utilization of
funds. a manner that

Financial Functions:

Initially the finance managers were considered advent of an event requiring funds. The
finance manager was given a target amount of funds to rise and was given a target
amount of funds to raise and was given the responsibility of procuring those Funds. So
his function was limited to raising funds as and when the need arise. Once the funds
were procured, his function was over.

However, over a period the scope of his function has tremendously widened. His
presence is required at every moment whenever any decision having involvement of
funds is to he taken.

Now it is the F.M require looking into the financial implication, of any decision in the firm.
The functions of F.M are to manage the funds. Any act. procedures, decision relating to
funds comes under the purview of the F.M. since every activity in the business
organization, be it purchases, production marketing or capital expenditure has a
financial implication, the finance function is interlinked with all areas. In particular, the
FM has to focus his attention on:

1. Procurement the required quantum of funds as and when necessary, at the lowest
cost.
2. Investing those funds in various assets in the most profitable way, and
3. Distribute returns to the shareholders in order to satisfy their expectations from the
firm.
The FM is usually faces with the following distinct scenario

1.What should be the size of a firm and how fast should it grow?
2.What are the various types of assets to be acquired? (Investment decision)
3.What should be the pattern of raising funds from various sources? (Financing
decision)

Depending upon the nature and size of the firm, the finance manager is required to
perform all or some of these functions from time to time. While performing the functions
he is required to take different decisions, which can be broadly classified into three
groups:

NEED FOR THE STUDY

 Funds flow statement provides an efficient method for the finance manager to
assess the growth of the firm.
 Funds flow analysis is very useful in planning intermediate and long-term
financing.
 Funds flow shows the principal sources and applications of funds.
 It shows the information that only be oriented through analysis and interpretation
of income statements and opening & closing balance sheets.
 In addition to studying the past flows, the analyst can evaluate the future flows by
means of funds flow statement based upon forecasts .

SCOPE OF THE STUDY

 The scope of study is confined only five years i.e. from 2015-16 to 2019-20.
 The study took in to account the data pertaining to the entire organization.
 The 'Funds Flow Statement shows the movement of Funds and it is a report of
the financial operations of the business undertaking
 It indicates various means by which funds were obtained during a particular
period and
ways in which these Funds were employed.
 In simple words, it is a statement of sources and application of Funds.

The funds flow statements helps the financial manager in having a detailed
analysis and understanding of changes. In the distribution of funds between two
balance sheet.
 Funds flow statement is not a substitute of an Income Statement or a Balance
Sheet. It provides only additional information regarding the changes in the working
capital. It cannot reveal continuous changes. Changes in cash are more relevant for
financial management than the working capital.

OBJECTIVES OF THE STUDY

The principal objective of the study is to assess the financial position and performance
of Vijaya Diaries Pvt Ltd through on analysis of Funds Flow Analysis with a view to
determine its strengths and weaknesses. The following are detailed objectives of the
study: - .
 To analyze and examine the funds flow statement through Working Capital,
funds from operations and funds flow statement.
 To measure the financial strength of the firm during the period of the study
(2016-17 to 2020-21)
 To analyze the need of the financial assistance for better utilization of capacities
and achievement of good results.
 To study whether working capital is adequate or not and to analyze operational
efficiency with the help of Funds Flow analysis.
 To study theoretical aspect of funds flow analysis and compare with practical
Funds Flow analysis with that of Vijaya Diaries Pvt Ltd.
 To determine the progress and profitability position of the Organization and to
offer appropriate suggestions for better performance of the organization.
 To suggest measures for the effective working of Vijaya Diaries Pvt Ltd.

METHODOLOGY

Data collection for the study has been collected from sources.

Secondary data
Secondary data is the data collected by others, for purposes other than solution at
hand. Secondary data for the present study has been collected from magazines,
journals, annual reports; published books, reference books, websites and any other
indirect source. Secondary data also collected from
 Balance Sheets of Vijaya Diaries Pvt Ltd for last Five years from 2016-17 to
2020-21.
 Profit and loss Account from 2016-17 to 2020-21. Reference from text books,
websites and journals relating to financial management.
 LIMITATIONS

Though the project work has been completed successfully, a few limitations are
observed however, proper care has been taken to overcome to impact of limitations on
the study.
 The biggest limitations frequent visits to the organization was not possible
because of Covid-19 situation.
 The scope for gathering data is very less. This is due to the fact that researcher
is vocational trainees.
 During the project period most of the staff members are busy with auditing and
other works. So, they could not afford to give full information.
 Some of the information was not available due to the confidential nature. . Since
officials, Executives and others were busy. The study was primarily focused on
secondary data.