Financing activities do not include cash outflows to:

• A. Pay dividends to shareholders
• B. Repurchase company shares
• C. Purchase inventory
• D. Repay long-term debt

Answer: (C)

Verified step by step guidance

1. Understand the concept of financing activities: Financing activities are transactions that involve raising capital or returning capital to investors. These activities typically include issuing shares, borrowing funds, repaying debt, and paying dividends.
2. Identify the cash outflows listed in the problem: The options provided are paying dividends to shareholders, repurchasing company shares, purchasing inventory, and repaying long-term debt.
3. Determine which activities are classified as financing activities: Paying dividends to shareholders, repurchasing company shares, and repaying long-term debt are all financing activities because they involve transactions related to the company's capital structure.
4. Analyze the option 'Purchase inventory': Purchasing inventory is classified as an operating activity, not a financing activity, because it is directly related to the company's core business operations and the production or sale of goods.
5. Conclude that purchasing inventory is the correct answer because it is not a financing activity, while the other options are examples of financing activities.