Example of cash flow from financing activity is : (2024)

FAQs

Which is an example of a cash flow from a financing activity? ›

Examples of common cash flow items stemming from a firm's financing activities are: Receiving cash from issuing stock or spending cash to repurchase shares. Receiving cash from issuing debt or paying down debt. Paying cash dividends to shareholders.

What is a cash flow example? Examples of cash flow include: receiving payments from customers for goods or services, paying employees' wages, investing in new equipment or property, taking out a loan, and receiving dividends from investments.

Cash Flow from Financing Activities is the net amount of funding a company generates in a given time period. Finance activities include the issuance and repayment of equity, payment of dividends, issuance and repayment of debt, and capital lease obligations.

Correct answer:Option d. Increase (or minus decrease) in stock, plus increase (or minus decrease) in debt, minus interest paid, minus dividends paid. Explanation: Cash flow from financing activities include the transactions that are undergone to fund the company's assets and investments.

In simple terms, the term cash outflow describes any money leaving a business. Obvious examples of cash outflow as experienced by a wide range of businesses include employees' salaries, the maintenance of business premises and dividends that have to be paid to shareholders.

Cash flow from investing activities involves long-term uses of cash. The purchase or sale of a fixed asset like property, plant, or equipment would be an investing activity. Also, proceeds from the sale of a division or cash out as a result of a merger or acquisition would fall under investing activities.

Examples of cash flow in a Sentence

We were able to maintain a steady cash flow. The company is looking at new ways to generate cash flow. These examples are programmatically compiled from various online sources to illustrate current usage of the word 'cash flow.

When a trade occurs at a higher price than the previous trade, the difference is considered a positive money flow. On the other hand, negative money flow takes place when the next purchases are at a lower price than the former.

Terminal cash flows are the cash flows incurred at the end of the project. For example, at the end of the new equipment's useful life, Mr. Tater could sell the equipment for $10,000. Since this is money coming into the Crunchy Spud Potato Chip Company, it represents a cash inflow.

The correct answer is c) Issuing stock. Issuing stock represents a cash inflow from financing activities because it involves selling shares of the company's stock to investors in exchange for cash. This cash is considered a financing activity because it is a source of funds for the company.

What does it mean when financing cash flow is positive? ›

Cash flow positive: What is it? Cash flow positive simply means more cash coming in than going out. This metric indicates that a business has enough working capital to cover all its bills and will not need additional funding.

Operating cash flow includes all cash generated by a company's main business activities. Investing cash flow includes all purchases of capital assets and investments in other business ventures. Financing cash flow includes all proceeds gained from issuing debt and equity as well as payments made by the company.

Example of cash flow from financing activity is payment of dividend.

Answer and Explanation:

Both a) interest paid to a lender and b) dividends paid to the company's common stockholders would be classified as financing activity on the statement of cash flows. Both of these activities are cash outflows that maintain financing from loans or the issuance of stocks.

Financing Activities

In the financing category, cash inflow includes the amount of money that you borrow and income generated by selling stock or equity. Cash outflows refer to dividend payments and the funds used for principal repayment of the principal amount on existing debt.

Solution: Payment of cash dividends is an example of a cash flows from financing activities.

Cash flow example from an operating activity is Interest Paid on Term Deposits by a Bank. Explanation: When producing a Cash Flow Statement, interest paid on term deposits by a bank is considered an operating activity.

The net cash flow from financing activities section can be either positive or negative, just like cash flow as a whole can be positive or negative. Neither is necessarily desirable or undesirable in a vacuum. It all depends on the company's particular circ*mstances.