Classifying business activity for financial reporting purposes

Business activities are classified as:

  • Operating activities (1)
    • Ordinary course of business (producing, selling goods) short-term
  • Investing activities (2)
    • Buying or selling long-term asset such as land, machinery
  • Financing activities (3)
    • Issuing debt
    • Redeeming debt
    • Issuing common stock
    • Repurchasing common stock
    • Paying cash dividend

Activity is classified depends on the nature of the firm