Financing activities are activities that result in changes in the size and composition of the equity capital and borrowings of the entity.

The separate disclosure of cash flows arising from financing activities is important because it is useful in predicting claims on future cash flows by providers of capital to the enterprise. The following examples of cash flows might arise under these headings:

  • Cash proceeds from issuing shares
  • Cash payments to owners to acquire or redeem the enterprise’s shares
  • Cash proceeds from issuing debentures, loans, notes, bonds, mortgages, and other short or long-term borrowings
  • Cash repayments of amounts borrowed

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