The statement of changes in financial position (SCFP) is a statement of flows, that is, it measures the changes that have taken place in the financial position of a firm between two balance sheet dates. It summaries the sources from which funds have been obtained and the uses to which they have been applied. As a statement of sources and uses of funds, drawing on the information contained in the basic financial statements, it shows the source of funds and application of funds during the period, The changes’ in financial position could be related several difference concepts of funds. The two most common usages of the term funds arc cash and working capital. Viewed in this sense, the SCFP would explain the changes in cash or working capital. Accordingly, there are two statements, that is, statement of changes in cash (popularly caned cash flow statement) and statement of changes in working capital (popularly known as sources and uses statements or funds flow statements). The preparation and use of the SCFP, as a tool of financial analysis and management, is illustrated here with reference to changes in (i) the net working capital, (ii) the cash position and (iii) the total resources.

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