What Is Cash Flow from Financing Activities?

Cash flow from financing activities refers to cash flows from activities that cause changes in the size and composition of corporate capital and debt. Includes cash inflows from financing activities and cash outflows from returning financing activities, and is presented separately according to their nature. Financing activities refer to activities that cause changes in the size and structure of corporate capital and debt.

Cash flow from financing activities

Cash flow from financing activities refers to cash flows from activities that cause changes in the size and composition of corporate capital and debt. Includes cash inflows from financing activities and cash outflows from returning financing activities, and is presented separately according to their nature. Financing activities refer to activities that cause changes in the size and structure of corporate capital and debt.

Chinese name

Cash flow from financing activities

the reason

Size of corporate capital and debt

the way

Itemized by its nature

Field

economic

1) The "cash received from absorbing investment" item reflects the cash received by investors from the company, including the net amount of funds actually received by issuing funds by issuing shares (issuing income minus issuing fees such as paid commissions) The net amount after the issuance), the actual cash received from issuing the bonds (the net amount of the issuance income minus the commission paid and other issuance expenses), etc. The costs of auditing, consulting, etc., which are directly paid by the enterprise to raise funds by issuing stocks, etc., and the issuance costs paid by issuing bonds, are reflected in the "other cash paid for financing activities" item and are not deducted from this item.

2) The "cash received by borrowing" item reflects the cash received by the company through various short-term and long-term borrowings.

3) The "other cash received related to fundraising activities" item reflects the cash inflows related to fundraising activities received by the enterprise in addition to the above items, such as accepting cash donations. If other cash inflows are larger in value, they should be reflected in separate items.

4) The "cash paid for debt repayment" item reflects the principal of the debt repayment in cash by the enterprise, including the repayment of the loan principal of the financial enterprise and the repayment of the principal of bonds. The loan interest and bond interest repaid by the enterprise are reflected in the "cash paid for debt service interest" item and are not included in this item.

5) "Cash paid for distribution of dividends, profits and interest payments" reflects the cash dividends and profits actually paid by the enterprise, as well as the interest paid to other investments.

6) The "other cash paid related to financing activities" item reflects the cash outflows related to financing activities paid by the enterprise in addition to the above, such as donated cash expenditures. Other cash outflows with larger value are reflected in separate items.

For cash flow analysis of financing activities, we mainly start from the following two aspects: (1) The cash flow of financing activities is less than or equal to zero. This situation may occur because the company's financing has reached a certain purpose, using cash flows generated by operating activities or cash flows generated by investment activities to repay debts at maturity, or because of errors in investment activities or operating activities of the enterprise Need to sell assets to pay off debts. (2) Cash flow from financing activities is greater than zero. The analysis of whether the cash flow of a company's financing activities is greater than zero is normal. The key depends on the purpose of raising funds. It may be that the company expands its scale. It may also be caused by a company's investment mistakes or operating cash flow.

Issues to focus on:

1. Is there a significant difference between the company's net income and the cash flow generated by the company's operating activities? Can the cause of this difference be clearly identified? Which accounting policies have caused these differences? Are there one-time events that cause these differences occur?

2. Does the relationship between cash flow and net income change over time? Why? Is it due to changes in operating conditions or changes in corporate accounting policies and accounting estimates?

3. What is the time lag between the recognition of income and expenses and the receipt and payment of cash? What kind of uncertainty needs to be resolved between the two?

4. Are the changes in accounts receivable, inventory, and accounts payable normal? If not, are there sufficient reasons?