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Interpretation

Highlights the financing and investing activities of Electronics Ltd. Its major source of funds is the issue of additional equity capital (86.8 per cent). Funds from other sources constitute a minor part (13.2 per cent) of its total financial resources. On the uses side, the major items are payment of long-term liabilities (66.1 per cent) and purchases of buildings and equipment (31 per cent). In absolute terms, the funds obtained by the issue of equity shares in the market (Rupees 2,10,000)have been utilized primarily for repayment of debentures (Rs 1,60,000) and partly for the purchase of building and equipment (Rs 75,000).

It reflects shortage of working capital with Electronics Ltd. There has been a decrease in every component of current assets (Table). The EL is required to raise additional long-term funds to salvage its current financial position.

The above illustration dearly shows the immense usefulness of the statement of changes in financial position to know major activities of the EL, financial, operational and investment.

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