Operating, Investing, and Financing Activities
Cash payments for purchases of merchandise
Operating
Cash payments to employees
Operating
Cash payments to lenders for interest on loans
Operating
Cash receipts from collection of interest on loans made to other entities
Operating
Cash receipts from sales of goods
Operating
Rent
Operating
Cash payments for equipment
Investing
Cash receipts from collection of principal for loans made to other entities
Investing
Equitment
Investing
Cash dividends paid to shareholders
Financing
Cash receipts from issuance of bonds
Financing
Cash receipts from sale of common stock
Financing
Dividens
Financing
Operating Activites
include cash activities related to net income. For example, cash generated from the sale of goods (revenue) and cash paid for merchandise (expense) are operating activities because revenues and expenses are included in net income.
Investing Activities
include cash activities related to noncurrent assets. Noncurrent assets include (1) long-term investments; (2) property, plant, and equipment; and (3) the principal amount of loans made to other entities. For example, cash generated from the sale of land and cash paid for an investment in another company are included in this category. (Note that interest received from loans is included in operating activities.)
Financing Activites
include cash activities related to noncurrent liabilities and owners' equity. Noncurrent liabilities and owners' equity items include (1) the principal amount of long-term debt, (2) stock sales and repurchases, and (3) dividend payments. (Note that interest paid on long-term debt is included in operating activities.)
