How will you treat payment of dividend in a Cash flow statement?

The correct answer is option 3- Cash Flow from Financing Activities.

Payment of dividend is a financing activity in a Cash flow statement.

In case of a financial enterprise (whose main business is lending and borrowing), interest paid, interest received and dividend received are classified as operating activities while dividend paid is a financing activity. In case of a non-financial enterprise, as per AS-3, it is considered more appropriate that payment of interest and dividends are classified as financing activities whereas receipt of interest and dividends are classified as investing activities.