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Cash flow

Financing cash flow

Cash moving between the company and the people who fund it: borrowing and share issues in, debt repayment, dividends, and buybacks out. Mature businesses should show it negative.

Financing cash flow shows cash moving between the company and the people who fund it. Money comes in when the company borrows or issues shares, and goes out when it repays debt, pays dividends, or buys back stock.

The healthy sign flips with the company's stage. A young business shows positive financing cash flow because it lives on raised money. A mature one should show negative, because its operations produce more cash than it needs and the surplus flows out to shareholders and lenders. The pattern to question is a mature company still being fed from outside year after year, and the operating section will usually tell you why.

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