Under Accounting Standard 3 (AS-3 / Ind AS 7), how is Dividend Paid by a non-financial manufacturing company treated in the Cash Flow Statement under the indirect method?

Explanation: Dividend paid represents a cost of raising equity capital and is classified as a Financing Activity (cash outflow). Under the indirect method of preparing a Cash Flow Statement: 1.    The dividend paid (or proposed/declared) reduces Net Profit in the P&L statement, but it is not an operating cash outflow. Hence, it is added back to Net Profit in the Operating Activities section to neutralize its effect on operating profit. 2.    The actual cash paid out is then deducted as a cash outflow under Financing Activities .