Cash Flow from Continuing Financing Activities
The net cash flow related to a company's debt and equity financing for its ongoing business operations, excluding activities from sold or discontinued segments.
Cash Flow from Continuing Financing Activities refers to the net cash generated or used by a company’s financing activities that are related to its ongoing (continuing) operations. This line item appears in the financing section of the cash flow statement and shows how the company’s regular business is financed through actions like borrowing money, repaying loans, issuing stock, buying back shares, or paying dividends. In essence, it captures the aggregate change in cash from all financing transactions of the business that will continue to operate, excluding any cash flows from parts of the business that have been sold or discontinued.
The "Continuing" vs. "Discontinued" Distinction
The term “continuing” is crucial when a company has discontinued operations—that is, segments of the business that have been sold, divested, or shut down. Accounting standards require that cash flows from these discontinued parts be reported separately to give investors a clear view of the ongoing business. Therefore, 'Cash Flow from Continuing Financing Activities' isolates the financing cash flows of the core business that will persist into the future.
When is this line item used?
If a company has no discontinued operations, its cash flow statement will simply report a single line for 'Net cash from financing activities.' The 'continuing' distinction only appears when a company needs to separate the cash flows of its ongoing operations from those of a business segment it has exited.
This separation is vital for analysis. It allows users of the financial statements to understand how much of the company’s financing activity is part of its sustainable, forward-looking strategy versus a one-time event related to a divested unit. For example, paying off a large loan associated with a sold division would be a discontinued financing activity, while issuing new bonds to fund the remaining business would be a continuing financing activity.
Common Transactions Included
The transactions included in this line item are the standard financing activities, with the key condition that they relate to the company's continuing operations.
Typical Financing Cash Flows
- Issuance of equity (stock): Cash received from selling new shares to investors (a cash inflow).
- Issuance of debt: Cash received from new loans or bonds (a cash inflow).
- Repurchase of stock (buybacks): Cash used to buy back the company's own shares (a cash outflow).
- Repayment of debt: Cash used to pay back the principal of loans and bonds (a cash outflow).
- Payment of dividends: Cash distributed to shareholders (a cash outflow).
The cash flow statement aggregates all such inflows and outflows from the continuing part of the business and presents a single net figure.
Examples in Practice
Example 1: Separating Continuing and Discontinued Flows
Example 2: Components of a Net Financing Figure
Key Takeaways
Cash Flow from Continuing Financing Activities is the net cash from financing transactions related only to a company's ongoing business operations.
It is a specific line item within the financing section of the cash flow statement that appears when a company has sold or shut down part of its business (discontinued operations).
This figure excludes any cash inflows or outflows from financing activities associated with those discontinued operations, which are reported separately.
Common transactions include issuing/repaying debt, issuing/repurchasing stock, and paying dividends for the core, continuing business.
The primary purpose of this disclosure is to provide analysts with a clear and sustainable view of how the company finances its ongoing operations, free from the noise of one-time divestitures.
Cash Flow from Continuing Financing Activities
The net cash flow related to a company's debt and equity financing for its ongoing business operations, excluding activities from sold or discontinued segments.
Cash Flow from Continuing Financing Activities refers to the net cash generated or used by a company’s financing activities that are related to its ongoing (continuing) operations. This line item appears in the financing section of the cash flow statement and shows how the company’s regular business is financed through actions like borrowing money, repaying loans, issuing stock, buying back shares, or paying dividends. In essence, it captures the aggregate change in cash from all financing transactions of the business that will continue to operate, excluding any cash flows from parts of the business that have been sold or discontinued.
Table of Contents
The "Continuing" vs. "Discontinued" Distinction
The term “continuing” is crucial when a company has discontinued operations—that is, segments of the business that have been sold, divested, or shut down. Accounting standards require that cash flows from these discontinued parts be reported separately to give investors a clear view of the ongoing business. Therefore, 'Cash Flow from Continuing Financing Activities' isolates the financing cash flows of the core business that will persist into the future.
When is this line item used?
If a company has no discontinued operations, its cash flow statement will simply report a single line for 'Net cash from financing activities.' The 'continuing' distinction only appears when a company needs to separate the cash flows of its ongoing operations from those of a business segment it has exited.
This separation is vital for analysis. It allows users of the financial statements to understand how much of the company’s financing activity is part of its sustainable, forward-looking strategy versus a one-time event related to a divested unit. For example, paying off a large loan associated with a sold division would be a discontinued financing activity, while issuing new bonds to fund the remaining business would be a continuing financing activity.
Common Transactions Included
The transactions included in this line item are the standard financing activities, with the key condition that they relate to the company's continuing operations.
Typical Financing Cash Flows
- Issuance of equity (stock): Cash received from selling new shares to investors (a cash inflow).
- Issuance of debt: Cash received from new loans or bonds (a cash inflow).
- Repurchase of stock (buybacks): Cash used to buy back the company's own shares (a cash outflow).
- Repayment of debt: Cash used to pay back the principal of loans and bonds (a cash outflow).
- Payment of dividends: Cash distributed to shareholders (a cash outflow).
The cash flow statement aggregates all such inflows and outflows from the continuing part of the business and presents a single net figure.
Examples in Practice
Example 1: Separating Continuing and Discontinued Flows
Example 2: Components of a Net Financing Figure
Key Takeaways
Cash Flow from Continuing Financing Activities is the net cash from financing transactions related only to a company's ongoing business operations.
It is a specific line item within the financing section of the cash flow statement that appears when a company has sold or shut down part of its business (discontinued operations).
This figure excludes any cash inflows or outflows from financing activities associated with those discontinued operations, which are reported separately.
Common transactions include issuing/repaying debt, issuing/repurchasing stock, and paying dividends for the core, continuing business.
The primary purpose of this disclosure is to provide analysts with a clear and sustainable view of how the company finances its ongoing operations, free from the noise of one-time divestitures.
Related Terms
Apply This Knowledge
Ready to put Cash Flow from Continuing Financing Activities into practice? Use our tools to analyze your portfolio and explore market opportunities.
This content is also available on our main website for public access.