Which term describes cash flows related to obtaining funds like debt and equity plus paying dividends?

Which term describes cash flows related to obtaining funds like debt and equity plus paying dividends?

• A. Net cash from operating activities
• B. Net cash from investing activities
• C. Cash flows related to obtaining funds to support the business, such as debt and equity transactions
• D. Net cash from tax payments

Answer: (C)

This is about financing activities—the part of the cash flow statement that shows how a company raises and returns capital. Financing activities include issuing or repaying debt, issuing or repurchasing equity, and paying dividends. The phrase “cash flows related to obtaining funds to support the business, such as debt and equity transactions” directly matches this category, since it describes how the company secures capital and distributes it to owners. In contrast, operating activities cover the core business operations, investing activities cover purchases and sales of long-term assets, and taxes are typically parts of operating cash flows. So the described option is the best fit.

This is about financing activities—the part of the cash flow statement that shows how a company raises and returns capital. Financing activities include issuing or repaying debt, issuing or repurchasing equity, and paying dividends. The phrase “cash flows related to obtaining funds to support the business, such as debt and equity transactions” directly matches this category, since it describes how the company secures capital and distributes it to owners. In contrast, operating activities cover the core business operations, investing activities cover purchases and sales of long-term assets, and taxes are typically parts of operating cash flows. So the described option is the best fit.