Final answer:
Cash flow to creditors is the cash paid out to lenders, which includes interest and net new borrowing payments, and is associated with a company's financing activities.
Step-by-step explanation:
The cash flow to creditors is defined as the net cash that a company pays out to its creditors and lenders during a period, which is the interest paid minus net new borrowing. This is represented as cash flow from financing activities specifically related to debt, minus dividends paid to stockholders, if any. It does not involve operating or investing activities directly. Rather, it reflects the cash flows between a company and its financiers who have provided it with debt capital.
Cash flow to creditors represents the amount of cash paid to creditors or lenders by a company. It shows the cash outflow related to the servicing of the company's debt. When calculating the cash flow to creditors, we subtract the cash flow from financing activities from the cash flow from operating activities. The cash flow from operating activities represents the cash generated or used in normal business operations, while the cash flow from financing activities represents the cash flow related to borrowing or repaying debt.