NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Financial Analysis
Which item is classified as a cash flow from financing activities under the indirect-method cash flow statement?
Proceeds from issue of debentures is a financing cash flow, because it changes the company's capital and borrowings. Plant purchases are investing, receivable changes belong to operating adjustments, and interest received by a non-financial company is generally investing.
- AProceeds from issue of debenturesCorrect
- BPurchase of plant and machinery
- CIncrease in trade receivables
- DInterest received on investments by a non-financial company
Explanation
Raising or repaying borrowings and issuing or buying back shares are financing activities. Purchase of machinery is investing, and a change in receivables is a working capital adjustment within operating activities. Interest received by a non-financial company is generally treated as investing.
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