Fund Flow Analysis and Its Application to the Financial Statements of Mining Companies
A. P. Fielden Dept. of Mining Engineering, University of Toronto, Toronto, Ont.
The object of this paper is to define and demonstrate the methods of preparing and presenting a statement of the source and applications of a company's funds, and to see how this technique can be applied to the analysis of the financial statements of mining companies. Fund statements have different meanings for investors, creditors and financial managers, and the significance that they have for each of these groups will be defined. The investor's point of view will be emphasized in this paper, as the only material available to the author consists of the annual reports to shareholders, and studies for creditor purposes would require that the author have access to company account books. Initially, a Funds Statement was a financial tool for company officers and market analysts whereby they could determine the current position of the company. Recently, however, they have been included in annual reports for the benefit of the stockholder. Funds Statements have had increasing popularity with mining companies, a dozen of which have included such statements in their annual report for the last three years. Steep Rock Iron Mines
Ltd., for instance, has included a Statement of Sources and Applications of Funds in its annual report since 1954. As in every other financial analysis technique, the Fund Statement has its advantages and limitations. These will be discussed in the Introduction. As the term "funds" may apply equally to net resources, working capital or cash, a clarification of terms will also be given.
analysis, Applications, Change, current liabilities, financial statements, fixed assets, Provision for Depreciation . . . . ., Working Capital Income Stat., Depreciation, Operation, Profits, Reports, Sheet, Trends