Definition
Financing Cash Flow
Financing cash flow is the cash a company raises from or returns to its providers of capital, through debt, equity, dividends and buybacks.
This section of the cash flow statement records proceeds from issuing shares or borrowing, and outflows for repaying debt, paying dividends and buying back shares. It shows how the company is financed and how it rewards capital providers.
Positive financing cash flow indicates the company is raising external funds; persistently negative financing flows often mean it is deleveraging or returning cash to shareholders. Read with the other two sections, it completes the picture of how a firm sources and uses cash.
Related terms
- Dividend Payout RatioThe dividend payout ratio is the share of net profit a company distributes to shareholders as dividends, with the rest retained for growth.
- Cash Flow StatementThe cash flow statement reconciles a company's profit to its actual cash movements, split into operating, investing and financing activities.
- Operating Cash FlowOperating cash flow is the cash a company generates from its core business operations, before investing and financing activities.
- Investing Cash FlowInvesting cash flow is the cash a company spends on or receives from buying and selling long-term assets and investments.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.