Cash Flows From Financing Activities

Cash flows from financing activities is the last of the three sections of a statement of cash flows. It shows the cash inflows and outflows related to transactions with the providers of finance i.e. the owners and the creditors of the company. Thus, cash flows from financing activities include the following basic components:

However certain items are classified differently by different accounting standards. For example, under IFRS, interest payments and dividend payments are classified either as cash flows from operating activities or cash flows from financing activities. Under US GAAP interest payments can only be classified as cash flows from operating activities and dividends can only be classified as cash flows from financing activities.

Example

Cash Flows from Financing Activities
Loan Obtained$20,000
Issuance of Common Stock125,000
Treasury Stock Purchased− 32,000
Dividends Paid− 10,000
Net Cash Flow from Financing Activities$103,000

Written by Irfanullah Jan