A company's cash balance has increased by $10 million. Which financing line item could have caused the increase?

• A. Debt issuance
• B. Equity issuance
• C. Dividends paid
• D. Share repurchases

Answer: (B)

Issuing new equity injects cash into the company. When investors buy additional shares, the company receives cash from those purchases, so the cash balance rises and shareholders’ equity increases as a result. This financing inflow directly explains an increase in cash today. By contrast, paying dividends or buying back shares reduces cash, so those activities wouldn’t explain an increase. Debt issuance would also bring in cash, but it adds a liability and sets up future obligations for interest and principal payments; the immediate cash rise due to equity issuance is the clearest way a financing activity can raise cash today.