Whereas the Balance Sheet shows, at a certain moment, the Source of the funds used by the company (Liabilities) and the application of the funds (Assets), the Statement of Sources and Usage of Funds (DOAR) displays the new sources and applications during the fiscal year. The DOAR does not show the new sources and applications totals but only those in the long-term items in the Balance Sheet, i.e., in Long-term Liabilities, Net Equity, Fixed Assets, and Long-term Receivables.
In this way, DOAR is a statement that shows the variation in the Net Working Capital.
Making a parallel between the Balance Sheet and the DOAR, the Balance Sheet shows the status of the company's investments and financing at a given moment. Many changes may occur in the period between two balance sheets. The company may, for example, have sold a part of their fixed assets and acquired others. It may have sold for cash and acquired through financing or capital increases. These transactions that considerably affect the company's financial position are not shown in the Balance Sheet, which will only provide a global picture of their effect.
Thus, the Balance Sheet does not explain why the company passed from a certain position of investments and financing to another, i.e., what additional funds the company used and how it applied them.
This is exactly the information DOAR shows. Through DOAR, you can know the flow of funds during a fiscal year: funds obtained, share of business transactions in the total funds generated, application of new funds, etc. The purpose of DOAR is to allow the financial analysis of the company as regards the movement of investments and financing and the administration of the company to obtain and apply the funds accordingly.
This statement, governed by section 188 of Law nr. 6,404/76, must contain:
1 - Source of Funds Net Profit for the Fiscal Year (+) Depreciation, Amortization or Depletion (+ or -) Variation in the Results of Future Fiscal Years Realization of Capital Contributions to Capital Reserves Increase of Long-term Liabilities Reduction of Long-term Receivables Disposal of Investments and Rights of the Permanent Assets Total Sources 2 - Application of Funds Dividends distributed Increase in Assets or Rights of the Permanent Assets Increase in Long-term Receivables Reduction in Long-term Liabilities Total Applications 3- Increase or Reduction in Net Working Capital (1-2) 4 - Variation in Net Working Capital
a) Initial Net Working Capital
b) Final Net Working Capital c) Variation in Net Working Capital (b-a) |
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