Which activities are classified as "financing activities" in the Statement of Cash Flows?

In the Statement of Cash Flows, financing activities include transactions that affect the equity and debt structure of the company. This category encompasses actions such as issuing or repurchasing stock, borrowing funds through loans or bonds, and repaying amounts borrowed.

Recognizing changes in equity and borrowings as financing activities is essential for understanding how a company finances its operations and growth. For example, when a company takes on debt, it increases its cash reserves, which can be invested in operations, while issuing new shares can provide necessary capital from investors. This classification helps investors and analysts gauge a company's capital structure and financial health.

The other activities listed do not fit into the financing category. Transactions affecting revenue relate to operating activities, and changes in dividends paid, while significant, are considered a financing activity in a broader sense but do not encompass the overall changes in equity and borrowings, which explicitly highlight the company's capital-related movements. Finally, equipment purchases fall under investing activities, which involve the acquisition or disposal of long-term assets crucial for maintaining operational capacity.