Final answer:
The Statement of Cash Flows reports three categories of activities: operating, investing, and financing. It shows how a company's cash balance changes over time, and illustrates the company's financial strategy in selecting different capital sources like loans, bonds, or stock sales.
"The correct option is approximately option B"
Step-by-step explanation:
The financial document that reports three broad categories: operating, investing, and financing activities is the Statement of Cash Flows. The Statement of Cash Flows is a critical component of a company's financial statements. It details how the firm's cash balance changes over time as a result of these three types of activities.
Operating activities include the day-to-day transactions related to running the business, such as revenue from sales and payments for expenses. Investing activities involve the purchase or sale of long-term assets like equipment or real estate. Lastly, financing activities reflect transactions designed to fund the business itself, which may include borrowing from banks or issuing stock.
Choosing between these sources of capital—borrowing from financial institutions, issuing bonds, or selling stock—depends on the firm's strategy. Borrowing entails commitments to scheduled interest payments regardless of the business's income, but allows the firm to maintain full control. In contrast, issuing stock dilutes ownership and entails responsibilities towards shareholders, yet it provides access to capital without fixed repayment obligations.