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 entity. Examples of cash flows arising from financing activities are:
- cash proceeds from issuing shares or other equity instruments;
- cash payments to owners to acquire or redeem the entity’s shares;
- cash proceeds from issuing debentures, loans, notes, bonds, mortgages and other short-term or long-term borrowings;
- cash repayments of amounts borrowed; and
- cash payments by a lessee for the reduction of the outstanding liability relating to a lease.