Which of the following represent cash outflows from financing activities?
Answer and Explanation:
Cash outflow from financing activities consist of the following transactions: Buyback of shares. Dividend payment. Payment of interest on debts.
Correct answer: Option c) payment of dividends. The financing activities of the cash flow statement show the flow of cash or the net change in cash due to the inflow and outflow of cash. It includes the sale or repurchase of stock, issuing bonds or dividends, and repayment of debt.
- Repayments of principal and interest on borrowings for purposes other than acquiring, constructing or improving capital assets.
- Grant payments to other governments or organizations for activities not considered as operating activities of the grantor.
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.
It refers to the amount of cash businesses spend on operating expenses, debts (long-term), interest rates, and liabilities. Examples of cash outflow include salary paid to employees, dividends paid to shareholders, reinvestment in business, rent paid for office premises, and more.
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.
- Cash payments for loans (other than program loans), and acquisition of debt instruments of other entities.
- Cash payments to acquire equity instruments.
- Cash payments into investment pools that the agency is not using as a demand account.
- Payments made to suppliers.
- Payments made to clear borrowing such as bank loans.
- Money used to purchase any fixed assets.
- Dividends paid out to any shareholders.
- Salaries and wages paid to employees.
- Any transport costs – such as vehicle leasing fees – related to business use.
Paid cash dividends to stockholders. This is the correct option. The payment of dividends to shareholders is a financing cash outflow.
What is the statement of cash outflows?
A cash flow statement is a financial statement that provides aggregate data regarding all cash inflows that a company receives from its ongoing operations and external investment sources. It also includes all cash outflows that pay for business activities and investments during a given period.
Answer and Explanation: The a) cash payment of interest expesne and c) paying cash to stockholders for dividends would be reported as financing activities. Both of these activities maintain financing accounts with interest going lenders or bondholders and dividends providing a return to stockholders.
Cash inflows from financing activities include cash received from issuing capital stock and bonds, mortgages, and notes, and from other short- or long-term borrowing.
A financial statement that shows the inflows and outflows of cash during a particular period of time is known as statement of cash flows.
Cash inflow may come from sales of products or services, investment returns, or financing. Cash outflow is money moving out of the business like expense costs, debt repayment, and operating expenses. The movement of all your cash—in and out—is recorded in detail on the cash flow statement in your financial reporting.
Inflows can include the money retail investors put into mutual funds. Outflows can include payments to investors or payments made to a company in exchange for goods and services. Fund flow does not include any money that is due to be paid. It looks at only actual cash that was paid into or out of the asset.
- Revenue from customer payments.
- Cash receipts from sales.
- Funding.
- Taking out a loan.
- Tax refunds.
- Returns or dividend payments from investments.
- Interest income.
Financing activities are transactions between a business and its lenders and owners to acquire or return resources. In other words, financing activities fund the company, repay lenders, and provide owners with a return on investment. Financing activities include: Issuing and repurchasing equity.
Accounts receivable, average collection period, accounts receivable to sales ratio--while you might roll your eyes at all these terms, they're vital to your business.
Major operating cash outflows include supplier payments, inventory, payroll and rent. Smaller expenses, such as professional services and supplies, go here too. The next category is investing. Investing inflows include the sale of assets like equipment or property and rental income or loan receivables.
What would be a cash outflow shown in the financing section?
Examples of cash outflow included in the cash flow from financing activities section are: Repayment of equity. Repayment of debt. Payment of dividends.
Cash outflows (payments) from operating activities include:
Cash payments to employees for services. Cash payments considered to be operating activities of the grantor. Cash payments for quasi-external operating transactions. Cash payments for program loans.
Cash received signifies inflows, and cash spent is outflows. The cash flow statement is a financial statement that reports a company's sources and use of cash over time. 1. A company's cash flow can be categorized as cash flows from operations, investing, and financing.
The cash flow statement shows all sources of cash and all of the uses of cash. Provides information about cash receipts (inflows) and cash payments (outflows).
Key takeaways. A cash flow statement is one of the 3 main types of financial statements that publicly traded companies prepare, along with the balance sheet and income statement. It shows the cash payments coming in and going out of the company over a period of time—usually a quarter or a year.
