Cash Flow from Financing Activities

Cash Flow from Financing Activities

Cash flow that a company acquires from a financing round instead of from operations. That is, cash flow from financing activities is the net amount that a company receives from issuing stock and bonds. Generally speaking, shareholders prefer to see positive cash flow from financing activities, but a negative amount could mean that a company is buying back its own stock, which drives up the share price. It is calculated thus:

Cash flow from financing activities = Cash from stock and bonds - debt service on bonds - dividends paid to stockholders - Stock buybacks - called debt.
References in periodicals archive ?
Finally, the last term in the right-hand side of equation (1) is the change in interest-bearing debt less the dividends plus the change in common stock and represents the cash flow from financing activities (CFFsCF) in the statement of cash flows.
There is more cash from operations, but a negative cash flow from financing activities indicates more debt repayments by the corporates," says Rahul Jain, Assistant Vice-President, AnandRathi Financial Services, adding that this was also an effort to restructure their debt financing, clean their balance sheets and strengthen them.
Statement of Cash Flows January 1, 2012 through september 30, 2012 Operating Activities: Net Income $20,000 Plus Expenses Not Using Cash: Depreciation $10,000 Plus Increases/(Decreases) in Current Liabilities: Trade Payables $20,000 Other Payables ($4,000) Accrued Liabilities $2,000 Less Decreases/(Increases) in Current Assets other Than Cash: Accounts Receivable ($30,000) Inventory ($10,000) CASH FLOW FROM OPERATIONS $8,000 Investing Activities: Plus Sale of Equipment $25,000 Less Purchase of Equipment ($150,000) CASH FLOW FROM INVESTING ACTIVITIES ($125,000) Financing Activities: Plus Borrowing $150,000 Minus Repayment of Debt ($50,000) Minus Dividends ($10,000) CASH FLOW FROM FINANCING ACTIVITIES $90,000 NET CHANGE IN CASH ($27,000) BEGINNING CASH $50,000 ENDING CASH $23,000
Note that any acquisition of capital assets that is not paid for with cash but instead is financed from external sources would not typically be accounted for under cash flow from investing activities nor would the financing be accounted for under cash flow from financing activities.
Cash flow from financing activities is forecast to remain level with the previous fiscal year.
The third section is called cash flow from financing activities.
With respect to financing and investing cash flows, Livnat and Zarowin (1990) reported that disaggregation of net cash flow from financing activities (NCFF) improved the association with stock returns, while disaggregation of net cash flow from investing activities (NCFI) yielded no improvement.
76 Consolidated Cash Flows Three months ended December 31, 2007 2006 Cash Flow from Operating Activities 4,914 39,831 Cash Flow from Investing Activities (103,035) (92,793) Cash Flow from Financing Activities 126,243 65,862 Cash and Cash Equivalents at Period End 334,003 315,294 Three months ended December 31, 2007 2006 Cash Flow from Operating Activities 139,532 160,601 Cash Flow from Investing Activities (280,912) (213,101) Cash Flow from Financing Activities 145,993 65,325 Cash and Cash Equivalents at Period End 334,003 315,294
31, 2006 2005 2005 Cash Flow from Operating Activities 1,006 (1,885) (603) Cash Flow from Investing Activities (2,820) 282 (3,202) Cash Flow from Financing Activities (721) (542) (567) Cash and Cash Equivalents at Period End 31,468 34,627 32,557
30, 2005 2004 2005 Cash Flow from Operating Activities (930) (52) 1,612 Cash Flow from Investing Activities 3,223 (53) (2,689) Cash Flow from Financing Activities (202) (96) 19 Cash and Cash Equivalents at Period End 13,280 12,226 11,186
31, 2004 March 31, 2005 Cash Flow from Operating Activities 6,111 (1,995) (1,175) Cash Flow from Investing Activities (1,696) (3,109) (4,127) Cash Flow from Financing Activities 3,272 (1,205) (1,223) Cash and Cash Equivalents at Period End 10,532 3,054 2,838
31, 2004 Cash Flow from Operating Activities 1,612 1,460 Cash Flow from Investing Activities (2,689) 578 Cash Flow from Financing Activities 19,654 1,574 Cash and Cash Equivalents at Period End 11,186 12,435