Definition of sources and applications (uses) of funds statement

analysis of changes in the financial position of a firm from one accounting period to another; also called sources and uses of funds statement. It consists of two parts: (1) sources of funds summarizes the transactions that increased working capital, such as net income, depreciation, issue of bonds, sale of stock, or an increase in deferred taxes; (2) application of funds summarizes the way funds were used, such as purchase or improvement of plant and equipment, payment of dividends, repayment of long-term debt, redemption or repurchase of shares, or payment of taxes.