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Cash flow
does dividend comes in operating activity
Replies (13)
No. It comes in financing activities
dividend paid is part of financing activity not of operating activity
Dividend recieved on investment in shares comes under investing activity and dividend paid on issue of shares comes under financing activity.
As per AS 3 CASH FLOW STATEMENT.UNDER INDIRECT METHOD:
(i) DIVIDEND INCOME- add in investing activity.
(ii) DIVIDEND PAID- less in financing activity and if there was any dividend proposed during the year add it in operating activity in net profit as adjustment or altenatevly u can make profit and loss appropriation account.
UNDER DIRECT METHOD
(i) DIVIDEND INCOME- add in investing activity.
(ii) DIVIDEND PAID- less in financing activity
Dividend recieved is an investment activity , whereas dividend paid is financing activity.
For a financing company dividend will come under operating activites
No if we go with net profit we have to add back dividend provision in oprerating activities and thend deduct in financing activities
if provision is not made will it then come under operating??
Under indirect method we have to calculate operating profit before working capital changes so we adjust operting incomes nd expenditure in net profit to obtain such profit..
So if there is any provision then we have to add it back.
Dividend received comes under investing activities while payment thereof comes under financing activities.
Which type of Interest Income or Expense will be deducted or added?? For eg: Interest on FDR,Bank OD/CC etc....
For a financing company, dividend received comes under operating activity while for others it comes under investing activities.
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