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INTRODUCTION

Background of the Study

Cash flow is the net amount of cash and cash-equivalents being transferred into and out
of a business. Without the proper accounting of cash inflow and outflow over time,
businesses would be operating at great risk of coming up short on liquid capital. Having a
statement of cash in-hand, what’s coming in (accounts receivable) and what's going out
(accounts payable), allows a business to meet expenses and plan future operations. The
statement which shows the flow of cash and cash-equivalents during a certain period is
known as Cash Flow Statement. Cash flow of a company includes three parts:

 Operating Cash Flow: It refers to the cash inflow and outflow because of internal
activities of a company.
 Investing Cash Flow: It refers to the cash inflow and outflow related to fixed
assets of a company like purchase or sale of Assets.
 Financing Cash Flow: It refers to the cash inflow and outflow related to financing
activities of a company like issuing shares or payment of dividend.

The statement of Cash Flow can be prepared using two methods:

1) Direct method :
Direct method where by major classes of gross cash receipt and gross cash
payment are presented.

2) Indirect method :
Indirect method where by the profit is adjusted for the effect of

i. Transaction of non-cash nature.

ii. Items associated with investing or financing cash

flow
iii. Any deferrals or accruals of past or future operating
cash receipt or payment
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Statement of the Problems

As a company it is very essential to hold the precise amount of liquid cash in the
company so-that it would not miss any kind of opportunities of investment and it would
not run short on cash for its operation. From an accounting point of view, the company
might be profitable, but if the receivables pass the due or are uncollected, the company
could run into financial problems. Even profitable companies can fail to adequately
manage their cash flow, which is why the cash flow statement is a critical tool for
analysts and investors. In this study, the main problems are:
 How the funds/cash injected into business in a given year are used?
 What are the sources of cash inflow?
 Why overdraft exists even when a company is making profit?

Objectives of the Study

Objectives of this study are as fallow:
 To evaluate the source of fund/cash inflow
 To analyze the sectors of funds utilization
 To analyze major techniques for Cash Flow management

Significances of the Study

Significances of this study are as follow:
 It helps to identify how liquid and solvent a business is.
 It provides the information of about all cash inflow and outflow from all sources.
 It helps to determine the working capital requirement.
 It can be helpful to shareholders, stakeholders and future researchers.

Research Methodology
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It implies how data will be collected and how they will be analyzed to draw conclusion.
This study will use following methods for the purpose of research:

Research Design
Research design is the blue print for the collection, measurement, analysis of data. It
consists structure and strategies of research. There are mainly four types of research
design: Exploratory, Descriptive, Comparative /Casual and Experimental research design.
This study is based on Descriptive research design.

Population and Sample

There are 25 finance companies in Nepal, (as per Nepal Rastra Bank directives). Among
them, this study has selected Gurkhas Finance Limited for the purpose of research. Here,
total 25 finance companies represent population and Gurkhas Finance Ltd. represents
sample.

Types of Data
Mainly data are classified as Primary and Secondary data. Data that has been collected by
the researcher himself/herself as per the objective of the research is known as Primary
data. Likewise, if a researcher uses the data developed by others in the past for their own
purpose is known as Secondary data. This study will rely on Secondary data.

Sources of Data
They imply likely places from where necessary data can be collected. There are mainly
two sources of data: Primary and Secondary sources of data. A primary source of data is
an original data source which consist data collected by researcher himself. Secondary
sources of data consist of data already collected. This study will use Secondary data
collected through published media, relevant books, reports, websites etc.

Data Collection Strategy

Data collection strategy is the strategy adopted by the researchers to collect the required
data. They can be categorized as i) direct-contact data collection strategy (personal
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interview, focus group, telephone poll, telephone interview, classroom assessment and so
on) and ii)indirect data collection strategy (paper survey, pen survey, web survey,
database/warehouse, existing reports and so on).

Analysis of Data
This implies various tools and techniques to measure and analyze the collected data for
interpretation. This study will use various accounting and statistical tools for the data
analysis such as: Operating Cash Flow ratio, Free Cash flow, etc.

Limitations of the Study

Limitations of this study are as fallow:
 This is a case study conducted on only one Power Company.
 This study ignores primary data.
 This study can’t cover overall dimensions of the subject matter.
 This study is based on limited references and time.

Organization of the Study

This study will be organized in three chapters:

CHAPTER I: INTRODUCTION
The first chapter of this study includes general background, statement of problems,
objectives of the study, significance of the study, research methodology, Limitations of
the Study and Organization of the Study.

CHAPTER II: RESULTS AND ANALYSIS

The chapter deals with presentation of the data using appropriate tables and figures and
their interpretation.

CHAPTER III: SUMMARY AND CONCLUSION

This chapter includes the brief sketch of the study, conclusion and implications of the
study.
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REFERENCES

www.gurkhasfinance.com.np

Nepal Rastra Bank (NRB)

Accounting Standard

Google

Wikipedia