Concept of State of origin and application of funds
The State of Origin and Application of Funds is one more tool of the Economic/Financial Analysis through which the variations that have occurred in the patrimonial masses of a company are obtained by comparing them between two accounting years in order to determine which have been the sources that have been generated in said period of time as a result of the company’s exploitation cycle and in which they have been applied or used.
Their knowledge serves to know if our activity has been carried out with the expected efficiency and that the economic results obtained respond to the objectives and economic-financial strategies that the company has drawn up.
In the State of origin and application of funds, the following are detailed:
– The resources that have entered the company during the year and the use that has been given to them.
– The effect that this entry movement and application of resources has had on current assets.
This information allows us to know if the resources generated in the activity have been sufficient to meet the required financing or if, on the contrary, the company has had to resort to additional sources of financing.
This information distinguishes:
Origins: are the resources that enter the company.
Applications: they are the destination given to said funds.
– Benefits of exercise
– Increase in payable al/p
– Increase in own funds
– Decrease in working capital
– Decrease in fixed assets
In the Application enter:
– Losses for the year
– Increased working capital
– Increase in fixed assets
– Reduction of payable liabilities l/p
– Reduction of own funds