Fund Flow Statement

This concept calculates how much money the business generated from its core activities. We start with the Net Profit from the Profit and Loss account. Then, we add back non-cash expenses like depreciation because they did not involve an actual outflow of money. We also subtract non-operating incomes like profit on sale of land. Example: If profit is 5 Lakhs and depreciation is 1 Lakh, funds from operations is 6 Lakhs.

Duration is a measure of time in years. It shows how long it takes for an investor to get back the money paid for a bond. It also helps bankers understand risk. If duration is high, the bond price will fall more when interest rates rise. Example: A bond with a 5-year duration is more sensitive to rate changes than a bond with a 2-year duration.

Working capital is the lifeblood of a business. It represents the liquidity available for daily tasks. It is the difference between assets that can be converted to cash within a year and debts due within a year. An increase in working capital means the business has more liquid resources. Example: If a company has 10 Lakhs in cash and owes 4 Lakhs to suppliers, its working capital is 6 Lakhs.