Personal Finance & Money Asked by Kashish Jain on March 19, 2021
I need a little here understanding this cash flow for Bajaj Finance. The cash flow here from operating activties is in negative and goes on increasing in negative value. While that for financing activities is positive and goes on to increase. However this stock is considered to be performing really well. And I see a similar trend in a couple of other finance businesses as well. Can someone help me understand this?cash flow of bajaj finance
Generally the Cash from operating activities is revenue generated by company for sale of goods less of expenses. This is a good indication if the company can survive long term, generally positive for manufacturing company. https://www.investopedia.com/terms/o/operating-activities.asp
The cash from financial activities show how the company is managing its capital and borrowing and the interest it is paying for funds. Generally negative for a manufacturing company https://www.investopedia.com/terms/c/cashflowfromfinancing.asp
However in case of finance companies, they don't sell anything; so all the costs salary, building, marketing, etc becomes operating loss. The money by a financial company is always by lending and hence positive.
As the financial statements are pretty standard way of representing things, it gives a different view.
Answered by Dheer on March 19, 2021
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