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A Sources and Uses statement shows how the different layers of financing are being used to fund the acquisition/development of a transaction (sources), and what those funds will be used for (uses). The total sources and uses must be equal to each other (all the money has to go somewhere).
For example, you may be contributing office furniture yourself, getting a loan for purchasing major equipment, and getting aline of credit for working capital. The difference between the uses of the funds and the sources is what you are asking a lender to provide.
The SU Statement First, you list sources by line item and then total them. Next, uses receive the same treatment. Obviously, the statement reader can quickly verify that total sources equals total uses. In order to make the two totals match, the preparer may have to add a category.
A source of funds statement is a financial statement that shows the sources of a companys cash flow. It identifies the various items that contributed to a companys increase or decrease in cash, as well as how those changes impacted the companys overall financial position.
Think of sources and uses as follows: Sources: The sources of cash required to consummate the transaction. Uses: The cash used satisfy all claimants of the target company so that ownership can be transferred (enterprise value or purchase price) and to pay all of the fees associated with the transaction.
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A Sources and Uses of Cash schedule gives a summary of where capital will come from (the Sources) and what the capital will be spent on (the Uses) in a corporate finance transaction. When computing their total amounts, the sources and uses accounts should equal each other.
The SU Statement First, you list sources by line item and then total them. Next, uses receive the same treatment. Obviously, the statement reader can quickly verify that total sources equals total uses. In order to make the two totals match, the preparer may have to add a category.
Its the cash flow statement that tells most about the companys financial health and ability to continue. The sources and uses of funds section of your business plan is a means of looking ahead at the cash flows of the business both incoming and outgoing to determine how much cash youll need to raise.

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