Limitations of Fund Flow Statement

  1. As the fund flow statement is just repositioning of data of a provided financial statement, it lacks resourcefulness in a factual sense.
  2. Fund flow statement does not forecast a firm’s future performance. Its indication is related to the performance of the previous year.
  3. It is unable to show accuracy when used for preparing an expected fund flow statement.
  4. It cannot show any constant changes. The reason revolves around the fact that only 2 specific years can be taken for the purpose of analysis.
  5. This statement cannot be taken as an alternative for a financial statement.

 

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