What is included in the net cash flows for discontinued operations?

Net cash flows for discontinued operations encompass all cash flows from operating, investing, and financing activities. This comprehensive approach aligns with financial reporting standards, which require the presentation of all relevant cash flows that arise from a discontinued segment.

Operating activities involve the core business operations of the discontinued unit and include cash receipts from customers and cash payments to suppliers and employees.

Investing activities pertain to cash flows associated with the acquisition and disposal of long-term assets related to the discontinued operations, such as the sale of equipment or property.

Financing activities reflect the cash flows related to transactions with the owners and creditors specifically linked to the discontinued operations, like repayment of borrowings or payment of dividends.

Including all three categories in the net cash flows provides a complete picture of the financial impact of the discontinued operation on the overall cash flows of the organization, ensuring transparent and useful financial information for stakeholders.