NISM Certifications · NISM-Series-XV: Research Analyst · Company Analysis - Financial Analysis
Which item is classified under cash flow from financing activities in a company's cash flow statement?
Repayment of a long-term bank borrowing is a financing activity. Financing flows relate to raising or repaying debt and equity capital. Sale of plant is investing, and an increase in receivables is an operating working-capital item.
- AProceeds from sale of plant and machinery
- BRepayment of a long-term bank borrowingCorrect
- CInterest received on investments
- DIncrease in trade receivables
Explanation
Financing activities cover changes in owners' capital and borrowings, so repayment of a long-term loan belongs there. Sale of plant is an investing inflow, and interest received on investments is generally treated as investing for non-financial companies. Change in receivables is an operating working-capital item.
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