What are financing activities?

Consist of:

• Activities that change the size and/or composition of the financial structure of the entity (including equity), and 
• Borrowings not falling within definition of cash

Usually associated with changes in non-current liabilities and equity

Example: 



Issuance of common stock, preference stock as well as sale of treasury stock is a fund raising activity and hence increase cash flow of the company. These three activities are under the equity section in the balance sheet

Payment of long term loan is a cash outflow and hence reduces the cash flow. This activity is found under the non current liabilities section in the balance sheet.

Purchase of treasury stock and payment of dividends reduces the cash and hence decreases cash flow of the company. These activities are under the equity section in the balance sheet

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