• A cash flow statement is concerned only with the changes in cash position while funds flow analysis is concerned with changes in working capital position between two balance sheet dates.
  • Cash flow analysis is a tool of short-term financial analysis while the funds flow analysis is comparatively a long-term one.
  • Cash is part of working capital and therefore an improvement in cash position results in improvement in the funds position but not vice versa. In other words “inflows of cash” results in “inflow of funds” but inflow of funds may not necessarily result in “inflow of cash”.
  • In funds flow analysis, the changes in various current assets and current liabilities are shown in a separate statement called schedule of changes in working capital in order to ascertain the

net increase or decrease in working capital. But in cash flow analysis, such changes are adjusted to funds from operations in order to ascertain cash from operations.


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