International Fund Flow

Balance of Payment:
            The balance of payment shows the summary of transaction of between the domestic business and the international business.
This statement has two components:

1.       Current account
2.       Capital account

Current account:
           It shows the summary of flow of funds generated from purchasing and selling of goods and services
and also shows the provision of income generated from investments
Example: Dividend on shares

Capital account:
          It shows the summary of flow of funds generated by investing in real assets.
.Example:  Branch open other country


Current account components:
         The following are the components of current account

• Balance of Trade
• Factor Income
• Transfer Payments

Balance of Trade:

          In this account selling and purchasing import and export data will record.

Example: Services of doctor.teacher etc. 

Factor Income:

         It shows dividend and interest received or payed 

Transfer Payments:

        It shows the information about the aids and grants received or paid

Capital Account Components:
        The following are the components of capital account

• Direct Foreign Investment
• Portfolio Investment
• Other Capital Investment

Direct Foreign Investment:

         It shows the direct foreign investment in real assets. 

Portfolio Investment:

         It shows the information about the long term securities 

Examples: Share and Bonds etc.

Other Capital Investment:

         It shows the investment in short term securities. 

Example: T Bill ,Commercial paper etc.