Operating activities, investing activities and financing activities.
This is a principle event which involves the primary business activity that a company or entity performs to earn a profit. In other words, these are the primary business operations which a company partakes in to earn revenue. Anything that the company was created to do; its primary purpose, consists part of its operating activities.
Investing in business activities
This is the second main category of net cash activities. It involves the buying, selling and general trading of long-term assets. Long term assets are non-current assets which are not intended to be converted to cash within at least one year of the balance sheet date. A piece of equipment or property is an example of a long-asset.
Financing business activity
Financial business activity keeps a record of how a company funds its projects, operations and expansions using an external source. If a company pays for its development- using its resources, no financing activity is carried out. The cash inflow usually comes from creditors or investors. And yes, these creditors are keeping an eye on how the company chooses to manage the funds provided for the stated project. In a way, financial activities also predict the liquidity of a company.
