Finance

This paper will explain and illustrate how each of component contributed to the change Cash from Financing Activities, which is a component of a regular cash flow statement prepared by companies.    Cash from financing activities should be distinguished from Cash from Operating Activities and Cash from Investing Activities, which are part of a regular cash flow statement.  This will be illustrated and explained using the cash flow figures of Wal-Mart Stores for the years 2009 and 2008.  See Appendix A. How each item contributed in the change Cash from Financing Activities is explained as follows  Basically changes in cash would come from cash receipts and cash payment arising from financing activities.  Cash receipts would come mainly from cash investments from owners or stockholders through issuance of stocks or sale of treasury stocks and proceeds from both short-term and long-term borrowing. Cash payments would come from payments to stockholders in the form of dividends or redemption or reacquisition of outstanding shares of stocks and repayment of amounts borrowed excluding interest payments related to such short-term and long-term borrowings.
            
These concepts could be better understood by looking at the cash flows of Wal-Mart Stores for the years 2009 and 2008.   It could be observed that net cash from financing activities amount to 9,918 million for 2009 broken down into Net Issuance of Stock at a negative amount of (3,521) Dividends at another negative amount of (3,746) and Other account with negative amount of (2,651). Compared with 2008 net cash from financing activities for 2008, Net Issuance of Stock at a negative amount of (7,691) Dividends at another negative amount of (3,586) are similarly expressed in the negative. However, Other account appeared with positive figure of 4,143.00 this time. See Appendix A.  Since 2009 and 2008 Net Issuance of Stock amount should have positive default amounts, the negative amounts should mean that the company has not issued but instead reacquired them as treasury shares or retired said stocks from stockholders during the last two years.   Since dividends involve payments or cash outflows, they should have negative amounts as default figures. 

As such, reflected dividend figures for both years should in fact represent dividend payments to stockholders.  The account Other during 2009 reflected a negative figure, which could only mean other payments to stockholders or creditors. Since dividends are already made and net issuance of stock represented reacquisition of stocks, the other payments should be applicable to creditors and which represent payments for borrowings made or retirement of some debts.  Compared with the account Other in 2008, the latter should be considered as proceeds of continuing borrowings since the amount was not reflected under net issuance of debt account.