Prerequisite -
Cash Flow Forecasting | Software Engineering
1. Cash Flow :
Cash flow refers to the concept of inflow and outflow of cash and cash equivalents during a particular period. In cash flow cash from the operations is calculated. It is useful for short term financing. It starts with opening and closing balance of cash and deals only with cash and it shows causes for changes in cash. So it is based on cash basis of accounting.
2. Fund Flow :
Fund flow refers to the concept of financial changes in working capital over a period of time. In fund flow fund from the operations is calculated. It is useful for long term financing. In this there is no opening or closing balances and it deals with all components of working capital and it shows causes for changes in net working capital. So it is based on accrual basis of accounting.
Difference between Cash Flow and Fund Flow :
