Interest paid on debentures by a manufacturing company would be:
- AAdded in Operating activities and subtracted from Financing activities
- BAdded in Investing activities and subtracted from Operating activities
- CAdded in Financing activities and subtracted from Investing activities
- DAdded in Cash and Cash equivalent
Solution & Step-by-step Explanation
For a manufacturing company, interest paid on debentures is a financing outflow. Under the indirect method of preparing a Cash Flow Statement:It is added back to Net Profit before Tax to calculate Operating Profit before Working Capital changes (since it is a non-operating expense).It is shown as an outflow (subtracted) under Financing Activities.