Dividend paid by a company to its shareholder is classified as which type of activity under cash flow statement?
Answer & explanation
Correct answer: option 3
The correct answer is option 3- Cash flow from financing activities.
Dividend paid by a company to its shareholder is classified as Cash flow from financing activities.
In the cash flow statement, cash flows are categorized into three main activities: operating activities, investing activities, and financing activities. Dividends fall under financing activities because they involve the distribution of profits to the company's shareholders. Dividend paid is a financing activity. If it is paid by non finance company then it is a financing activity but if it is paid by any financing company like mutual fund company then it will be an operating activity as it is their core activity.