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How will you treat payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement?

Cash flow from financing activities treats payment of ‘Interest on Debentures’ while preparing a Cash Flow Statement.

Cash flows from financing activities are the cash flows from the transactions relating to providing funds (both capital and borrowings) to the company, i.e., long-term liabilities and shareholder's capital.

Examples of Cash Flows from Financing Activities

(i) Cash proceeds from issuing shares or other similar instruments.

(ii) Cash proceeds from issuing debentures, loans, notes, bonds, and other short-term or long-term borrowings

(iii) Cash repayment of amounts borrowed.

(iv) Payment of Interest and Dividend.