Activities in Business Organizations

TEAM 7
 FINANCING ACTIVITIES

Financing activities include transactions involving debt, equity, and

dividends. Debt and equity financing are reflected in the cash flow
from financing section, which varies with the different capital
structures, dividend policies, or debt terms that companies may
have.
 FINANCING ACTIVITIES

Cash Flow from Financing Activities

The financing activity in the cash flow statement focuses on how a firm
raises capital and pays it back to investors through capital markets. The
largest line items in the cash flow from financing activities statement are
dividends paid, repurchase of common stock, and proceeds from the
issuance of debt. Which shows the net flows of cash that are used to
fund the company. Financing activities include transactions involving
debt, equity, and dividends.
 FINANCING ACTIVITIES

Importance of Financing Activities

Details of financing activities are crucial for both investors and debt
providers for the company. The reflection of the these activities
accounts for determining the fund efficiency of the enterprise. It shows
the ability of the organization to raise funds and manage funds.
 FINANCING ACTIVITIES

What are the 3 financing activities

Financing activities. include cash activities related to noncurrent

liabilities and owners' equity. Noncurrent liabilities and owners' equity
items include
1. the principal amount of long-term debt,
2. stock sales and repurchases,
3. dividend payments.

 FINANCING ACTIVITIES

What are the 3 financing activities

Long Term Debt - Long-term debt is listed under long-term liabilities on

a company's balance sheet.
long-term debt generally refers to a company's loans and other
liabilities that will not become due within one year of the balance sheet
date. (The amount that will be due within one year is reported on the
balance sheet as a current liability.)

For example, if a company has a bank loan of ₱50,000 that requires

monthly interest and principal payments, the next 12 monthly principal
payments will be the current portion of the long-term
 FINANCING ACTIVITIES

What are the 3 financing activities

Stock Sales and repurchases - The wash-sale rule states that, if an

investment is sold at a loss and then repurchased within 30 days, the
initial loss cannot be claimed for tax purposes. So, just wait for 30 days
after the sale date before repurchasing the same or similar investment.

Dividend payments - A dividend payment is the distribution of a

company's profits to its shareholders. Dividends are usually paid in cash
but sometimes in company stock, and companies often use them to
return excess profits to investors.
INVESTING ACTIVITIES

Investing activities are business activities related to growing

a business and bringing profits to the company in the long
term. It involves buying and selling long-term assets and
other business investments. When adding a new machine,
for example, the company can produce more output.
Likewise, with acquisitions, it makes a company more
efficient or increases revenue.
 INVESTING ACTIVITIES

Cash Flow from Investing Activities

Cash Flow from Investing Activities is the section of a company’s cash
flow statement that displays how much money has been used in (or
generated from) making investments during a specific time period.
Investing activities include purchases of long-term assets (such as
property, plant, and equipment), acquisitions of other businesses, and
investments in marketable securities (stocks and bonds).
 INVESTING ACTIVITIES

Importance of Investing Activities

Investment activities are essential in supporting future business growth.

By investing, companies expect to get more revenue and make higher
profits. The prospect of higher profits is undoubtedly attractive to stock
investors, which will see a rise in stock prices. For creditors or banks,
more profit means more cash inflow, so the company has a higher ability
to repay loans.
 INVESTING ACTIVITIES

Investing activities can include:

Purchase of property plant, and equipment (PP&E), also known as

capital expenditures.
Proceeds from the sale of PP&E
Acquisitions of other businesses or companies
Proceeds from the sale of other businesses (divestitures)
Purchases of marketable securities (i.e., stocks, bonds, etc.)
Proceeds from the sale of marketable securities
 INVESTING ACTIVITIES

There are more items than just those listed above that can be included,
and every company is different. The only sure way to know what’s
included is to look at the balance sheet and analyze any differences
between non-current assets over the two periods. Any changes in the
values of these long-term assets (other than the impact of depreciation)
mean there will be investing items to display on the cash flow statement.
 INVESTING ACTIVITIES
(EFFICIENT VS EFFECTIVE)

Efficiency vs Effectiveness
These two buzzwords are often used interchangeably, especially in the
workplace. But there are some key differences that are important for
employees and management to understand. For businesses to be
effective and efficient, all team members must first grasp the distinction
between these two terms.

Efficiency is the ability to produce an intended result in the way that

results in the least waste of time, effort, and resources.

Effectiveness is the ability to produce a better result, one that delivers

more value or achieves a better outcome.
 INVESTING ACTIVITIES
(EFFICIENT VS EFFECTIVE)

How to Increase the efficiency of your teams?

Delegate clearly. Teams that lack efficiency may need better

delegation. When everyone knows exactly what their role is, work
gets done faster.
Streamline your daily workflow. There are always ways to optimize
workflow. Your team needs to find a process that eliminates waste
and frees up space, time, and energy for priority tasks.
Communicate expectations. 44% of employees say that
miscommunication has caused a delay or failure to complete
projects. Clearly communicated expectations are the gateway to
improved team efficiency.
 INVESTING ACTIVITIES
(EFFICIENT VS EFFECTIVE)

How to Increase the efficiency of your teams?

Identify priorities, and stick to them. Effective but under-efficient

teams may simply be prioritizing too many tasks at once. Pick your
daily priorities as a team and focus 100% of your energy on them
until completion. An effective time management technique to do this
is the Pomodoro Technique. This method uses time blocking to
increase focus on your prioritized tasks.
Motivate with positivity. Sometimes, a little bit of employee
appreciation is all that’s needed to motivate a team. Positive
reinforcement and recognition can be used as a tool to motivate
productivity. This helps overall efficiency.
 INVESTING ACTIVITIES
(EFFICIENT VS EFFECTIVE)

How to Increase the effectiveness of your teams?

Encourage flexibility. Rigidity is something that many efficient teams
struggle to let go of. To become more effective, teams must be open
to change.
Embrace collaboration. Ideal effectiveness thrives when everyone’s
minds come together as one. Be an inclusive leader by listening to
the input of everyone on the team.
Diversify opinions. Everyone has something of value to offer. If
decisions are always made by the same two or three people, a team
can miss out on the opportunity for fresh ideas.
Exercise mutual trust. Letting go of control and trusting that your
colleagues can reach their goals is essential for any team. It enables
team members to work together and for leaders to allocate
resources more efficiently.
 OPERATING ACTIVITIES

Operating activities are the duties an organization performs that are

directly tied to offering its customers products and/or services.
Manufacturing, distributing, promoting, and selling a good or service are
some examples of the company's basic business operations. Financial
statements of a corporation, including the income statement and cash
flow statement, may be used to track these operations.

Operating activities are distinguished from investing or finance

operations, which are roles performed by a business that have no direct
connection to the delivery of products and services. Instead, funding
and investment operations aid in the organization's ideal long-term
performance. This means that a company's issuing of shares or bonds is
not considered to be an operating activity.
 OPERATING ACTIVITIES

Important facts: A company's operating activities include its production,

sales, advertising, and marketing initiatives.

The Basics of Operating Activities

The routine tasks a business performs to produce and sell its goods,
generate money, as well as perform basic administrative and
maintenance tasks, are referred to as operating activities. The
operational profit that is left over after operating expenditures have
been subtracted from operating revenues is the operating income that is
displayed on a company's financial statements. Operating activities can
be easily distinguished by classification in financial statements in the
case of uncertainty.
 OPERATING ACTIVITIES

Interest income and costs are not included in operating income. The
following, for instance, may be a list of the operational activities of a
clothing store:

• Purchasing supplies from vendors and investing for companies that

manufacture garments.
• Paying for the transportation of raw materials to the production and
finished goods to warehouses.
• Coordinating transportation from warehouses to retail establishments
and mail-order clients.
• Paying workers to work in retail establishments and warehouses.
• Paying supervisors to monitor operations.
• Taxes to be paid.
• Paying rent on retail and warehousing spaces.
 OPERATING ACTIVITIES

Operating Revenues

Manufacturing and selling a company's goods or services are two of its

primary operating operations that generate money.
Selling things produced internally by the business or those provided by
other businesses, as with retailers, are examples of sales activity.

For instance, a spa company might sell health and beauty goods in
addition to services like massages to generate additional revenue.

Even though they contribute to overall operational cash flow, interest

and dividend income aren't regarded as significant operating activities
because they aren't a company's primary sources of revenue.
 OPERATING ACTIVITIES

Operating Expenses

Costs associated with production as well as those related to promoting

and marketing the company's goods or services are included in main
operating expense categories.

The expenditures associated with promoting the business and its goods
or services through various media channels, whether through
conventional or online platforms, are included in operating costs
connected to advertising and marketing. Additionally, marketing
expenses cover things like attending trade exhibits and taking part in
open events like charity fundraisers.
 OPERATING ACTIVITIES

Operating Activities and the Cash Flow Statement

One of the most important divisions of the statement of cash flows is

cash flows from operating activities. It stands apart from the sections on
financing and investing.

• n long-term assets, like machinery and buildings.

• whereas finance activities are the cash flows that a business generates
from transactions like bond issuance, bond retirement, stock sales, and
stock buybacks between its owners and creditors.
 OPERATING ACTIVITIES

Operating Activities and the Cash Flow Statement

Accountants add depreciation costs, losses, decreases in current assets,

and increases in current liabilities to net income, then deduct gains,
increases in current assets, and decreases in current liabilities to obtain
an accurate picture of a company's cash flow from operating activities.
To determine where a company is truly obtaining its money, investors
look at the cash flow from operating activities apart from the other two
components of cash flow.
 OPERATING ACTIVITIES

Operating Activities and the Cash Flow Statement

To accurately depict a company's cash flow from operating activities,

accountants first add depreciation costs, losses, increases in current
liabilities, decreases in current assets, and losses in current assets to net
income. They then subtract gains, increases in current assets, and
decreases in current liabilities. Investors examine the cash flow from
operating activities in isolation from the other two components of cash
flow to determine where a company is actually getting its money.
 REFERENCES:
https://www.investopedia.com/terms/c/cashflowfromfinancing.asp#:~:text=What%20Is%2
0Cash%20Flow%20From,debt%2C%20equity%2C%20and%20dividends
https://saylordotorg.github.io/text_managerial-accounting/s16-02-three-types-of-cash-
flow-
activ.html#:~:text=in%20operating%20activities.)-,Financing%20activities,and%20(3)%20d
ividend%20payments.
https://penpoin.com/investing-activities/
https://corporatefinanceinstitute.com/resources/knowledge/accounting/cash-flow-from-
investing-activities/
https://penpoin.com/investing-activities/
https://www.betterup.com/blog/efficiency-vs-
effectiveness#:~:text=Efficiency%20is%20the%20ability%20to,or%20achieves%20a%20b
etter%20outcome.
https://www.investopedia.com/terms/o/operating-activities.asp