I am struggling with this question can you describe the primary difference between "funds flows" analysis and ratio analysis. Which analysis technique is preferred and why?
Fund flow analysis is the analysis of the funds flow of the organization. Fund flow analysis deals with the changes in working capital position of the company between the two different periods. Fund flow describes the changes in current assets and current liabilities of the organization. It reveals important changes in the utilization and disposition of resources. It is a statement of changes in the financial position.
Ratio analysis is the analysis of financial position of the company in terms of liquidity, ...
This solution of 338 words explains the differences between funds flow analysis and ratio analysis. It also discusses which analysis technique is preferred and why.