From the course: Accounting Foundations: Statement of Cash Flows
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Financing activities: Share issuance, dividends, repurchases
From the course: Accounting Foundations: Statement of Cash Flows
Financing activities: Share issuance, dividends, repurchases
- The data to analyze the financing cash flows with respect to share issuance, payment of cash dividends and payments to repurchase shares comes from the stockholders' equity section of the balance sheet. Here's the stockholder's equity section of the balance sheet for Blaine Avenue company, a hypothetical business. The paid-in capital account increases when a company issues additional shares of stock. The fact that the paid-in capital account increased by $450, that's 1,450 less a thousand, that indicates that Blaine Avenue received an additional $450 in cash during the year by issuing shares of stock. The retained earnings account increases from the amount of net income and decreases through the payment of dividends. In the absence of detailed information, it is possible to infer the amount of dividends paid by identifying the unexplained change in the retained earnings balance. For Blaine Avenue, the computation is as…
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