MEANING OF SOURCES OF FUNDS IN BUSINESS

Section within the statement of changes in financial position showing

the increase in funds for the accounting period. Funds are typically
defined as working capital or cash. Sources of working capital
include: (1) working capital provided from operations (net income plus
nonworking capital expenses less nonworking capital revenue); (2)
decrease in noncurrent assets ; (3) increase in noncurrent liabilities;
and (4) increase in stockholders equity. If funds are defined as cash
rather than working capital, the following two additional sources of
funds are used: (1) decrease in current assets other than cash; and
(2) increase in current liabilities.
WHAT IS WORKING CAPITAL?
Working capital is defined as the difference between current assets
and current liabilities. Current assets are the most liquid of your
assets, meaning they are cash or can be quickly converted to
cash. Current liabilities are any obligations due within one year.
Working capital measures what is leftover once you subtract your
current liabilities from your current assets, and can be a positive or
negative amount. The working capital is available to pay your
company's current debts, and represents the cushion or margin of
protection you can give your short-term creditors.
[The working capital ratio (Current Assets/Current Liabilities)
indicates whether a company has enough short term assets to cover
its short term debt. Anything below 1 indicates negative W/C
(working capital). While anything over 2 means that the company is
not investing excess assets. Most believe that a ratio between 1.2
and 2.0 is sufficient. Also known as net working capital". ]

NON CURRENT ASSETS
A company's long-term investments, in the case that the full value
will not be realized within the accounting year. Noncurrent assets
are capitalized rather than expensed, meaning that the company
allocates the cost of the asset over the number of years for which
the asset will be in use, instead of allocating the entire cost to the
accounting year in which the asset was purchased. An asset which is
not easily convertible to cash or not expected to become cash within
the next year. Examples include fixed assets, leasehold
improvements, and intangible assets.
NON CURRENT LIABLITIES
Long-term financial obligations those are not due within the present
accounting year. Examples of noncurrent liabilities include long-term
borrowing, bonds payable and long-term lease obligations. Any
noncurrent liabilities will be listed on the company's balance sheet.
Obligation that is not to required being satisfied within
12 months of the balance sheet date.
STOCKHOLDERS EQUITY
The portion of the balance sheet that represents the capital
received from investors in exchange for stock (paid-in capital),
donated capital and retained earnings. Stockholders' equity
represents the equity stake currently held on the books by a firm's
equity investors.

It is calculated either as a firm's total assets minus its total
liabilities, or as share capital plus retained earnings minus treasury
shares:


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