Definition of Financing Activities
Financing activities reported on the statement of cash flows (SCF) involve changes to the long-term liabilities, stockholders’ equity, and short-term borrowings during the period shown in the heading of SCF.
Examples of Financing Activities
Sources of cash provided by financing activities include:
- Borrowing money on a short-term basis and/or long-term notes basis from a bank or other lenders
- Issuing bonds payable
- Issuing common stock
- Issuing preferred stock
- Sale of treasury stock
- Other increases in long-term liabilities and stockholders’ equity
Uses of cash reported in the financing activities section of SCF include:
- Repayment of short-term loans and/or long-term loans
- Retirement of bonds payable
- Purchase of a company’s own stock (treasury stock)
- Declaration and payment of dividends
- Other decreases in long-term liabilities and stockholders’ equity
