Final answer:
The question refers to the three sections of a cash flow statement: Operating (daily business activities), Investing (purchase of long-term assets), and Financing (transactions like debt, equity, and dividends). Companies raise capital for investing through early-stage investors, reinvesting profits, borrowing, or selling stock.
Step-by-step explanation:
The question pertains to the three categories of cash flow activities found in a company's cash flow statement: Operating, Investing, and Financing. These categories reflect different aspects of a company's financial transactions and processes.
Operating activities are the day-to-day functions of a business that involve revenue and expense transactions; these are the core activities that generate most of the cash flows for a company. Investing activities generally involve the purchase and sale of long-term investments, property, plant, and equipment, and other assets that can be used over many years. Lastly, Financing activities generally include transactions involving debt, equity, and dividends.
Firms can raise the capital needed for investing activities through various means such as: (1) from early-stage investors; (2) by reinvesting profits; (3) by borrowing through banks or bonds; and (4) by selling stock. When companies seek financial capital for significant investments, such as buying machinery or starting new projects, they carefully consider these sources.