Fund accounting
A fund is a combination of several balance sheet items. For the cash flow statement , this is understood as an accounting unit, with the total of funds being accounted for separately.
Therefore, the term fund can be roughly understood to mean “means of payment”. Since the size and composition of the funds can be freely selected by the company, the most appropriate fund selection and delimitation for a company is one of the most important decisions in the context of the cash flow statement . In this context, the balance sheet of a company can be understood as the largest possible fund.
The fund accounts record information on the earnings position and the financial position in order to expand information on the development of the financial position. It also shows the cash flows for the period (incoming and outgoing payments) broken down by:
- Cash flow from operating activities (sales area)
- Cash flow from investing activities (investment area)
- Cash flow from financing activities (external area)
The sum of the three areas results in the change in financial resources in the financial year and maps the three cash flows more comprehensively.
The following data from the annual report are required for the calculation:
- The balance sheet with the values of the previous year and the reporting year,
- the income statement ( profit and loss account ) for the reporting year and
- the grid .
Fund type 1
The size of the fund results from the comparison of the figures from the previous and reporting year and provides information on the increase or decrease in liquid funds. The changes in liquid funds are positive in this case (see table: Fund type 1). What this is due to can be answered by analyzing the opposite position (see table: Cash flow statement for fund 1).
| Fund type 1 (in thousands of euros) | Reporting year | +/- | Previous year |
|---|---|---|---|
| Change of ownership | 0 | 0 | 0 |
| Securities | 1,352,773 | 902.466 | 450,307 |
| Bank balances | 1,438,639 | 122,462 | 1,316,177 |
| Liquid funds (total) | 2,791,412 | 1,024,928 | 1,766,484 |
| change | 1,024,928 |
| Cash flow statement for fund type 1 (in thousands of euros) | Front column | inflow | Drain | +/- (net) |
|---|---|---|---|---|
| A. Sales area | ||||
| Sales | 6,359,377 | |||
| (+) Receivables from L./L. previous year | 211,299 | |||
| total | 6,570,676 | |||
| (-) Claims from L./L. reporting year | 271.084 | 6,299,592 | ||
| other own work capitalized | −154.367 | |||
| Other company income | 248.091 | |||
| Use of materials / goods | 2,959,330 | |||
| (-) RHB stock previous year | 468.238 | |||
| total | 2,491,092 | |||
| (+) RHB inventory reporting year | 567,877 | |||
| total | 3,058,969 | |||
| (+) Liabilities from L./L.- previous year | 336,829 | |||
| total | 3,395,798 | |||
| (-) Liabilities from L./L. reporting year | 368,250 | 3,027,548 | ||
| Personnel expenses including social benefits | 982,462 | |||
| (-) Increase in pension provisions | 55,365 | 927.097 | ||
| Other operating expenses | 1,248,257 | |||
| Other interest and similar income | 41,658 | |||
| Depreciation on securities held as current assets | 5,099 | |||
| Taxes on income and earnings | 476,000 | |||
| Increase in other assets | −237.904 | |||
| Increase in other provisions | −416,613 | |||
| Increase in other liabilities | −679.005 | |||
| Reduction of the RAP active | −19.311 | |||
| Increase in RAP passive | 51,846 | |||
| total | 6,403,283 | 4,414,705 | ||
| net operating income | 1,988,578 | |||
| B. Investment area | ||||
| Investments in fixed assets (according to the asset schedule ) | 925.067 | |||
| Income from investments | 4,480 | |||
| total | 4,480 | 925.067 | ||
| Net capital expenditure | −920.587 | |||
| Financial surplus | 1,067,991 | |||
| C. Outside area (capital area) | ||||
| Increase in subscribed capital | 0 | |||
| Increase in capital reserve | 0 | |||
| (+) Increase in retained earnings | 648.148 | |||
| (-) Allocation to retained earnings | 372.116 | 276.032 | ||
| (+) Increase in shares of other shareholders | 6,789 | |||
| (-) Share attributable to other shareholders | −4,116 | 10,905 | ||
| Distribution (previous year) | 330,000 | |||
| total | 286.937 | 330,000 | ||
| Net external financing | −43.063 | |||
| Change in liquid funds | 1,024,928 |
Fund type 2
For fund type 2, in addition to the items from fund type 1, trade receivables and other assets are used. The consideration is still limited to the assets side of the balance sheet . Only fund type 3 offers a net invoice.
| Fund type 2 (in thousands of euros) | Reporting year | +/- | Previous year |
|---|---|---|---|
| Change of ownership | 0 | 0 | 0 |
| Securities | 1,352,773 | 902.466 | 450,307 |
| Bank balances | 1,438,639 | 122,462 | 1,316,177 |
| Claims (L./L.) | 271.084 | 59,785 | 211,299 |
| Other assets | 1,401,392 | 237.904 | 1,163,488 |
| Change in short-term financial wealth | 1,322,617 |
| Cash flow statement for fund type 2 (in thousands of euros) | Front column | inflow | Drain | +/- (net) |
|---|---|---|---|---|
| A. Sales area | ||||
| Sales | 6,359,377 | |||
| other own work capitalized | −154.367 | |||
| Other company income | 248.091 | |||
| Use of materials / goods | 2,959,330 | |||
| (+) Increase in RHB inventory (previous year) | 99,639 | |||
| (-) Increase in liabilities from L./L. (Previous year) | 31,421 | 3,027,548 | ||
| Personnel expenses including social benefits | 982,462 | |||
| (-) Increase in pension provisions | 55,365 | 927.097 | ||
| Other operating expenses | 1,248,257 | |||
| Other interest and similar income | 41,658 | |||
| Depreciation on securities held as current assets | 5,099 | |||
| Taxes on income and earnings | 476,000 | |||
| Increase in other provisions | −416,613 | |||
| Increase in other liabilities | −679.005 | |||
| Reduction of the RAP active | −19.311 | |||
| Increase in RAP passive | 51,846 | |||
| total | 6,700,972 | 4,414,705 | ||
| net operating income | 2,286,267 | |||
| B. Investment area | ||||
| Net capital expenditure | −920.587 | |||
| Financial needs | 1,365,680 | |||
| C. Outside area (capital area) | ||||
| Net external financing | −43.063 | |||
| Change in short-term financial wealth | 1,322,617 |
Fund type 3
In fund types 1 and 2, only asset items on the balance sheet were combined into arithmetical units. In fund 3 short-term liabilities are included, which are to be understood in the sense of restricted sizes (restrictions).
| Fund type 3 (in thousands of euros) | Reporting year | +/- | Previous year |
|---|---|---|---|
| Change of ownership | 0 | 0 | 0 |
| Securities | 1,352,773 | 902.466 | 450,307 |
| Bank balances | 1,438,639 | 122,462 | 1,316,177 |
| Claims (L./L.) | 271.084 | 59,785 | 211,299 |
| Other assets | 1,401,392 | 237.904 | 1,163,488 |
| Change in short-term financial wealth | 4,463,888 | 1,322,617 | 3,141,271 |
| other provisions | 2.103.403 | 416.613 | 1,686,790 |
| Liabilities (L./L.) | 368,250 | 31,421 | 336,829 |
| other liabilities | 2,241,780 | 679.005 | 1,562,775 |
| short term liabilities | 4,713,433 | 1,127,039 | 3,586,394 |
| short-term net financial assets | −249,545 | 195,578 | −445.123 |
| Change in short-term net financial assets | 195,578 |
| Cash flow statement for fund type 3 (in thousands of euros) | Front column | inflow | Drain | +/- (net) |
|---|---|---|---|---|
| A. Sales area | ||||
| Sales | 6,359,377 | |||
| other own work capitalized | −154.367 | |||
| Other company income | 248.091 | |||
| Use of materials / goods | 2,959,330 | |||
| (+) Increase in RHB inventory (previous year) | 99,639 | 3,058,969 | ||
| Personnel expenses including social benefits | 982,462 | |||
| (-) Increase in pension provisions | 55,365 | 927.097 | ||
| Other operating expenses | 1,248,257 | |||
| Other interest and similar income | 41,658 | |||
| Depreciation on securities held as current assets | 5,099 | |||
| Taxes on income and earnings | 476,000 | |||
| Reduction of the RAP active | −19.311 | |||
| Increase in RAP passive | 51,846 | |||
| total | 6,700,972 | 5,541,744 | ||
| net operating income | 1,159,228 | |||
| B. Investment area | ||||
| Net capital expenditure | −920.587 | |||
| Financial needs | 238,641 | |||
| C. Outside area (capital area) | ||||
| Net external financing | −43.063 | |||
| Change in short-term financial wealth | 195,578 |
Sources & literature
- Haas, Peter: Costs, Investment, Financing , 3rd edition, Munich 2000
- Weilenmann, Paul: Cash flow statement in practice , 2nd edition, Zurich 1992
- Peemöller, Volker H .: Balance sheet analysis and balance sheet policy , 3rd edition, Wiesbaden 2003