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It also provides insights into an entity’s liquidity, solvency, and skill to generate cash flows. As per IND AS 7, the purpose of money circulate statements is to supply details about an entity’s money inflows and outflows during a given period. Important restricted balances within “cash and money equivalents”, similar to margin cash or pledged deposits, have to be disclosed individually together with management commentary explaining their nature and reason for restriction per Para 48. Interest paid/received and dividends received/paid have to be disclosed individually per Para 31, with constant classification across durations. Classification depends strictly on the underlying activity’s nature, working (core business), investing (long-term assets), or financing (equity/debt funding), not merely on asset/liability movement.
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