Question

The term ‘Fund’ as used in Fund Flow Analysis means

• A. Cash only
• B. Current assets
• C. Current liabilities
• D. Excess of current assets over current liabilities

Hint:

Fund Flow = movement in working capital (Current Assets – Current Liabilities).

Answer 1

The Correct Option is D

Step 1: Definition of Fund in Fund Flow.
In fund flow analysis, the term "fund" does not just mean cash. It means working capital.
Step 2: Working capital concept.
Working capital = Current Assets – Current Liabilities.
This measures liquidity available for operations.
Step 3: Option analysis.
- (A) Cash only: Wrong, too narrow.
- (B) Current assets: Wrong, liabilities must be considered too.
- (C) Current liabilities: Wrong, incomplete.
- (D) Excess of current assets over current liabilities: Correct, this is working capital.
Step 4: Conclusion.
Fund in Fund Flow Analysis refers to working capital.