Advantages Of Funds Flow Statement

Accounting , Finance
The main benefits or advantages of funds flow statement can be highlighted as follows:

1. Source And Use Of Funds

Funds flow statement discloses the source of funds received by the firm and the areas where those funds are used.

2. Changes In Financial Position

It discloses the changes in financial position (increase or decrease in working capital) and explains the reasons for changes.

3. Allocation Of Resources

Funds flow statement helps in proper allocation of resources by providing key financial information and data to the management.
advantages funds flow statement
4. Evaluation Of Financial Position

It provides information regarding financial structure, fund generating capacity, position of assets and liabilities of the firm, working capital condition etc. which helps to know the actual financial position of the firm.

5. Future Guidance

Funds flow statement provides past financial data and information to the management. It helps the top level management to make future financial policies and plans.

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6. Use Of Working Capital

Funds flow statement checks the proper use of working capital and gives suggestions to improve.

7. Image And Goodwill

It ensures proper allocation of resources and proper use of working capital which increase the productivity and profitability of the firm. So, it helps to maintain good image and goodwill among shareholders.
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Advantages Of Flexible Budget

Accounting , Business
Some of the notable benefits or advantages of flexible budget can be pointed out as follows:

1. Range Of Activity

Generally, static budget is prepared for single level only, but flexible budget is prepared for a range of activity. This is one of the major advantages of flexible budget.

2. Easy Comparison

Flexible budget helps to compare actual output, cost or performance with standard or budgeted output, cost and performance.

3. Cost Control

It can be used as a effective tool for cost control because flexible budget reacts to adverse situation.

Static budget is based upon assumptions, judgment, estimates and approximations. But flexible budget is prepared on the basis of knowledge and principles.

5. Flexibility

It is more flexible than static budget. It can be modified or changed according to the market situation and environment.

6. Performance Measurement

Flexible budget helps to measure managerial and operational performance.
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Disadvantages Of Budgeting

Accounting , Finance
Major limitations or disadvantages of budgeting can be pointed out as follows:

1. Based On Estimation

Budget is prepared on the basis of approximation, estimates, assumptions and judgment. So, it may lack accuracy and reliability.

2. Cost And Time Consuming

It takes more time, effort and cost to prepare budget for large sized organizations.

3. Less Flexibility

It is less flexible in nature and cannot be changed easily according to the market situation and environment.

Budgeting may demotivate employees due to the lack of participation. It may create behavioral problems. 

5. Conflict

There is a high chance of conflict because of lack of coordination among employees and coordination between, units, departments and branches.
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Advantages Of Budgeting

Accounting , Finance
The main benefits or advantages of budgeting can be pointed out as follows:

1. Goal Achievement

Budgeting provides guidelines to achieve operational and financial goals of the organization.

2. Better Coordination

It helps to maintain better coordination by linking organizational objectives and available resources in order to achieve the goal.

3. Guidelines

Budgeting provides guidelines or road map for better performance.

4. Better Decision Making

Budgeting helps the management to take wise decisions by providing proper guidelines and direction.

5. Resource Utilization

It promotes proper utilization of resources (material, labor and capital) to increase productivity and profitability.

6. Motivation

It motivates the management and employees which leads to better performance and job satisfaction.

7. Performance Evaluation

It helps to evaluate the performance of different units, departments and employees in the organization.

It helps to maintain better communication between the management and the subordinates.

9. Increase Efficiency

Because of motivation, coordination and better decision making, it helps to increase efficiency of the organizational activities. 

10. Corrective Action

It regularly monitors the progress of organizational activities and provide tool for corrective action when needed.
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Advantages Of Value Engineering

Accounting , Business
The main benefits or advantages of value engineering can be highlighted as follows:

1. Cost Reduction

Value engineering helps to reduce the cost of production without reducing the quality of the product.

2. Improved Quality

It helps to improve product quality and design to attract more customers.

3. Customers' Satisfaction

It helps to increase customers' satisfaction by fulfilling their expectations and needs without increasing the cost.

4. Simplify The Process

Value engineering simplifies the production process by eliminating unnecessary functions.

5. Higher Profit

Business firm can make more profit because of lower production cost and higher sales volume.

6. Resource Utilization

It promotes proper utilization of resources to enhance production process.
advantages of value engineering

7. Modernizing

Value engineering focuses on modern, cheaper and efficient techniques and approaches to improve the productivity.

8. Standardization

It gives emphasize on the standardization of firms' products and services.
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Advantages And Disadvantages Of Sinking Fund

Accounting , Business
Merits Or Advantages Of Sinking Fund

The main advantages of maintaining sinking fund can be pointed out as follows:

1. Replacement Of Asset

Sinking fund helps the company to replace its fixed assets by providing adequate fund.

2. Redemption Of Bond

It provides fund to redeem preference share, bond and other forms of long-term loans.

3. Improve Goodwill And Faith

It helps to maintain goodwill and faith of the company and also helps to maintain future credibility.

4. Encourage Investment

It encourages the investors to invest in the firm because of its goodwill, faith and credibility.
advantages-disadvantages-sinking-fund

5. Financial Stability

Sinking fund promotes financial stability of the business firm.

Demerits Or Disadvantages Of Sinking Fund

Some of the major drawbacks or disadvantages of sinking fund can be pointed out as follows:

1. Reduction In Profit

It reduces the profit to be distributed as dividend.

2. Complexity

It is very complex to maintain sinking fund accounts.

3. Difficulty

Although sinking fund provides fund for the replacement of old assets, it is very difficult to estimate the required amount for new assets/
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