Why dividend paid in case of financing companies are considered as financing activity?

Hi Riya,

Dividend paid is always a financing activity, whether paid by a financial enterprise or a non-financial enterprise. This is because dividend expense is associated with raising finance for the business. That is, when funds are raised by issuing equity/preference shares, then the company has to pay dividend and so it is included in the financing cost for a company.

Likewise, financing companies also require certain funds for operating its business. And so, funds raised by these companies for their operational purpose must be included in their financial cost.
 

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No it is considered as operating activity
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