How should dividends paid to NCI at disposal be categorized in the cash flow statement?

In a cash flow statement, dividends paid to non-controlling interests (NCI) at the time of disposal are categorized as cash outflows from financing activities. This classification stems from the nature of the transaction, which involves payments to shareholders.

Dividends represent a return of capital to equity investors, including non-controlling interests, and thus are considered part of the financial activities of the company. Since financing activities encompass transactions that affect the equity and debt of the business, cash outflows for dividends are recorded here. By classifying these payments as financing activities, the cash flow statement accurately reflects the company's financial commitments to its shareholders and effectively separates operational cash flows from financing-related transactions.

The other categories do not fit this context because operating activities typically involve the core business operations, such as revenue generation and expenses, while investing activities usually pertain to the acquisition and disposal of long-term assets. Since dividends paid are not about operational profits or asset transactions but rather monetary returns to investors, they do not align with the definitions of cash flows from operating or investing activities.