Global Journal of Management and Business Research, C: Finance, Volume 22 Issue 5

this concept must be included in investing activities. By way of example, the international accounting standard cited above notes that it must consist of the following within investing activities: *Payments made to support capitalised development costs and internal construction of any kind *receipts from the sale of fixed assets that are replaced due to economic and physical obsolescence, such as receipts from the sale of buildings, plant and machinery and equipment that are to be replaced with more innovative assets *receipts from the sale of other long-term assets or other long-term assets *payments made in cash for the acquisition of equity or debt instruments of other companies *payments made to implement interests in joint ventures *Cash receipts from sales of equity or debt instruments of other enterprises or interests in joint ventures *Cash advances and loans made to third parties, other than advances and loans made by a financial institution or bank, as it will include this item in financing activities *Cash receipts from the repayment of loans and advances made to third parties, other than advances and loans made by a financial institution *cash receipts arising from the repayment of advances and loans made to third parties *Cash payments made for entering into futures contracts, option contracts or swap contracts unless the enterprise holds the contracts for trading purposes and the payments are classified as financing activities * cash receipts made from the conclusion of futures contracts, option contracts or swap contracts, unless the arrangements are in possession of the enterprise for trading purposes and the payments are classified as financing activities Finally, concerning financing activities, the international standard IAS 7 defines why it is relevant to show these flows separately. The standard emphasises how important it is to aggregate the financial values because it is indispensable to forecast the demands of future cash flows from the company's capital suppliers. The aforementioned international standard gives some examples of items, understood as requirements or sources, which must include in financing activities. The examples highlighted and the international standard cited are as follows: *receipts from the issue of shares or other instruments identifying the capital of an enterprise *cash payments to shareholders for the purchase or redemption of shares in the company *cash receipts from the issuance of bonds, loans, mortgages or any other short-term OR long-term financing *cash outflow resulting from the repayment of sums arising from loans previously obtained by the company *cash payments resulting from the reduction or cancellation of the residual liaoility of a lease contract International Accounting Standard IAS 7 concludes the analysis of the cash flow statement with an in-depth examination of some items that require particular explanation according to the international organism that issued the standard. In highly synthetic terms, these items can be summarised as follows: “cash flows Cash flows arising from transactions in a foreign currency shall be recorded in an entity’s functional currency by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the cash flow. The cash flows of a foreign subsidiary shall be translated at the exchange rates between the functional currency and the foreign currency at the dates of the cash flows” Interest and dividends: “cash flows from interest and dividends received and paid shall each be disclosed separately. Each shall be classified in a consistent manner from period to period as either operating, investing or financing activities. The total amount of interest paid during a period is disclosed in the statement of cash flows whether it has been recognised as an expense in profit or loss or capitalised in accordance with IAS 23 Borrowing Costs. Interest paid and interest and dividends received are usually classified as operating cash flows for a financial institution. However, there is no consensus on the classification of these cash flows for other entities. Interest paid and interest and dividends received may be classified as operating cash flows because they enter into the determination of profit or loss. Alternatively, interest paid and interest and dividends received may be classified as financing cash flows and investing cash flows respectively, because they are costs of obtaining financial resources or returns on investments. Dividends paid may be classified as a financing cash flow because they are a cost of obtaining financial resources. Alternatively, dividends paid may be classified as a component of cash flows from operating activities in order to assist users to determine the ability of an entity to pay dividends out of operating cash flows.” Taxes on income: “Cash flows arising from taxes on income shall be separately disclosed and shall be classified as cash flows from operating activities unless they can be specifically identified with financing and investing activities.” Changes in ownership interest in subsidiaries and other business: 16 Global Journal of Management and Business Research Volume XXII Issue V Version I Year 2022 ( ) C © 2022 Global Journals Does the Formal Structure of the Cash Flow Statement have an Impact on the Understanding of the Data Contained in the Report Explaining the Company's Financial Dynamics? Foreign currency cash flow: