What is Cash Flow from Financing Activities?
Cash flow from financing activities reports the cash movements between the company and its providers of capital: shareholders and lenders. It includes proceeds from issuing shares or debt, repayments of borrowings, dividends paid and share buybacks. Together with operating and investing activities it makes up the cash flow statement.
How It Works
- Add cash received from issuing shares or new borrowings.
- Subtract cash paid for dividends, share buybacks and debt repayments.
- Include lease principal payments under IFRS 16.
- Report the net figure as the third section of the cash flow statement.
Saudi Context
Saudi companies raising sukuk often show large positive financing cash flows in the year of issuance, followed by steady outflows as profit-distribution payments occur.
Example
If a company issues SAR 200 million of new debt and pays SAR 30 million in dividends, net financing cash flow is +SAR 170 million.