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Company A is a textile manufacturing industry. Which of the following activities will be recorded in the cash flow statement of company A?

Question

Company A is a textile manufacturing industry.

Which of the following activities will be recorded in the cash flow statement of company A?

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Solution

In a cash flow statement, the activities recorded typically fall under three categories: operating activities, investing activities, and financing activities.

Common activities for a textile manufacturing company like Company A that would appear in the cash flow statement include:

  1. Operating Activities:

    • Cash received from the sale of textiles.
    • Cash paid to suppliers for raw materials (like cotton, yarn, etc.).
    • Cash paid to employees for salaries and wages.
    • Cash received from customers.
  2. Investing Activities:

    • Cash outflows for the purchase of machinery or equipment.
    • Cash inflows from the sale of old machinery or equipment.
    • Cash used for investments in other companies or projects.
  3. Financing Activities:

    • Cash inflows from obtaining loans or issuing shares.
    • Cash outflows for repayment of loans.
    • Cash paid for dividends to shareholders.

So, the activities that will be recorded in the cash flow statement of Company A will primarily depend on cash transactions related to these three categories.

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