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Limitations of Fund Flow Statement

LIMITATIONS OF FUND FLOW STATEMENT

1. In the real sense, the fund flow statement lacks originality because it is only a rearrangement of data given in financial statements.

2. It indicates only the past year’s performance and is not for the future. Even to prepare projected fund flow statement, it cannot show much accuracy.

3. It cannot reveal continuous changes. Because only any particular two years are taken into account for analysis purpose.

4. Fund flow statement is not a substitute for a financial statement. It gives only some information about changes in working capital alone.