Analysis of Fund Sources and Their Uses
Analysis of sources of funds or analysis of funds is very important for financial management. This analysis is useful to find out how the funds are used and the origin of these funds. A report describing the source of funds and the use of funds. Analysis tools that can be used to determine the condition and financial performance of a company are ratio and proportional analysis.
The first step in the analysis of sources and uses of funds is a change report prepared on the basis of two balance sheets for two time periods. The report illustrates the changes in each of these elements that reflect the source or use of funds. In general, the calculated financial ratios can be grouped into six types, namely:
Liquidity Ratio, this ratio is to measure a company's ability to meet its short-term financial obligations.
Leverage Ratio, this ratio is used to measure how much funds are supplied by company owners in proportion to the funds obtained from the company's creditors.
Activity Ratio, this ratio is used to measure the effectiveness of management in using its resources. All activity ratios involve a comparison between the level of sales and investment in various types of assets.
Profitability Ratio, this ratio is used to measure the effectiveness of management as seen from the profits generated against the company's sales and investments.
Growth Ratio, this ratio is used to measure how well the company maintains its economic position of economic and industrial growth.
Valuation Ratio, this ratio is the most complete measure of company performance because it reflects the combination of the effect of the risk ratio with the ratio of return.
Corporate Finance
The company is an institution (organization) that manages business activities (business) and is oriented to making a profit. In every organization the company has various aspects such as marketing, production, human resources and finance, all of these aspects must be managed (managed) properly so as to achieve the objectives of the company establishment. One aspect that must be managed is the financial aspect of the company through the application of corporate finance management.
In understanding company finances it is necessary to distinguish clearly the differences between owner's finances and company finances. The shareholder's finances are in the owner's household while the company's finances are in the firm's household which is strictly separated.
Company Financial Report
Periodically (months / years) the company must make financial reports. The company's financial statements consist of a balance sheet, an income statement and an income statement. The company's financial statements are very important because through the financial statements various parties, both internal and external, the company will be able to assess the company's performance during a certain period.
The parties concerned with the company's financial statements include; management, owners, creditors as well as the government and other parties that have an interest in the company.
Balance sheet (Balance sheet)
A balance sheet is a statement of financial position at a particular time consisting of wealth (assets), liabilities and equity.
Assets consist of;
Current assets are assets that have a turnover period of less than one accounting period (one year)
Fixed assets or long-term assets (Fixed assets and long-term assets) are assets that have a turnover period of more than one accounting period (one year).
Other assets are assets that cannot be categorized as current assets or fixed assets above, for example patents, good will, long-term investment securities.
Obligations consist of;
Current liabilities are liabilities / debts to be paid in the current year, such as trade payables, fee debts, bank loans that are due etc.
Long-term obligations / debt, that is, debt that has a term of more than one year.
Equity
Equity is the net worth of the company which is the right of the owner of the company and is often referred to as own capital.
Loss / Profit (Income statement)
The Profit / Loss Report is a report on a company's operating activities consisting of receipts reduced by all expenses (costs) within a certain period.
Cash Flow
Cash flow statements describe cash receipts and disbursements for a certain period (usually one year). Cash flow consists of; Cash flow from operations and cash flow from funding