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D
Payment of interest on loan
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Solution
The correct option is D
Payment of interest on loan
Payment of interest on loan would not be considered as a cash flow from operating activities for a non-fianncial company. It is an operating activity for a financial company.
Operating cash flow is equal to revenues minus costs, excluding depreciation and interest. Depreciation expense is excluded because it does not represent an actual cash flow; interest expense is excluded because it represents a financing expense.
The correct answer is (d.) Cash inflows from the sale of property, plant, and equipment. The cash flows under the operating activities usually represent the cash flows related to the purchasing of inventory from suppliers and the sales of goods or services to customers, and interest received on accounts receivable.
Past cash outflows wouldn't be considered by the company when they using the net present value method for determining the profitable project. It considers present cash flows to calculate the current value of future cash flows.
In a nutshell, cash flow refers to the money that flows into, through, and out of your business during a set period of time. Cash flow doesn't include credit from suppliers, money owed to you from debtors, or money that you have in the bank – it's solely concerned with the flow of money into your business over time.
Answer and Explanation: The cash flows from operating activities are the cash flows that are related to the business operations of a firm such as cash received from customers, cash paid for advertising, and cash paid to suppliers.
Cash flows from operating activities result from providing services and producing and delivering goods. They include all other transactions not defined as noncapital financing, capital and related financing or investing activities.
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