Which of the following is a component of cash ﬂow to creditors? I. Interest paid.
II) Net new borrowing.
III) Dividends paid.
A) I only
B) II only
C) I and II only
D) I and III only
E) II and III only

Question

Quizplus · Accepted Answer

I) Interest paid is a component of cash flow to creditors as it represents the cash outflow from the company to pay the interest on their debts.
II) Net new borrowing is also a component of cash flow to creditors as it represents the cash inflow from new borrowing or the cash outflow from the repayment of existing debts.
III) Dividends paid is not a component of cash flow to creditors as it represents the cash outflow from the company to its shareholders, who are not creditors. Dividends are included in cash flow to investors.

Which of the Following Is a Component of Cash ﬂOw