Cash Flow from Investing Activities

Cash Flow from Investing Activities

On a cash flow statement, an item summarizing the change to a company's cash flow from its investments in securities. Cash flow from investing activities includes capital gains and losses. It is important to the cash flow statement because investments in securities may result in negative cash flow even when the company is otherwise profitable. Depending on the liquidity of the company's portfolio, the negative cash flow may actually be positive.
References in periodicals archive ?
The Company had negative cash flow from investing activities of approximately $1.0 million during the six-month period ended June 30, 2019 compared to negative cash flow from investing activities of approximately $4.3 millionduring the six-month period ended June 30, 2018.
The cash flow from investing activities amounted to -4.9 million euros (previous year: -2.4 million euros), whereby investments in property, plant and equipment, in the form of technical equipment, accounted for 2.5 million euros and the acquisition of securities in the USA for 2.3 million euros.
Fitch moved the capital expenditure from the cash flow from operating activities (CFO) to the cash flow from investing activities (CFI).
This reflects the impact of a change in classification of USD 115.6 million of cash proceeds received from the beneficial interest of receivables sold from cash flow from operating activities to cash flow from investing activities due to an accounting standard adopted in the beginning of 2018.
The logic and consistent classification in the cash flow statement was to record the purchase of these bonds as investments in securities (within cash flow from investing activities).
The cash flow statement presents all of the cash flows pertaining to the merger or acquisition in the cash flow from investing activities as one item.
Therefore, the cash flow from investing activities, or
Statement of Cash Flows January 1, 2012 through september 30, 2012 Operating Activities: Net Income $20,000 Plus Expenses Not Using Cash: Depreciation $10,000 Plus Increases/(Decreases) in Current Liabilities: Trade Payables $20,000 Other Payables ($4,000) Accrued Liabilities $2,000 Less Decreases/(Increases) in Current Assets other Than Cash: Accounts Receivable ($30,000) Inventory ($10,000) CASH FLOW FROM OPERATIONS $8,000 Investing Activities: Plus Sale of Equipment $25,000 Less Purchase of Equipment ($150,000) CASH FLOW FROM INVESTING ACTIVITIES ($125,000) Financing Activities: Plus Borrowing $150,000 Minus Repayment of Debt ($50,000) Minus Dividends ($10,000) CASH FLOW FROM FINANCING ACTIVITIES $90,000 NET CHANGE IN CASH ($27,000) BEGINNING CASH $50,000 ENDING CASH $23,000
After a while the shrinkage of assets, leads to decline in incoming cash flow from investing activities. Inabilities to pay debts along with negative reaction of securities market increase the financing costs.
Note that any acquisition of capital assets that is not paid for with cash but instead is financed from external sources would not typically be accounted for under cash flow from investing activities nor would the financing be accounted for under cash flow from financing activities.
The next section is called cash flow from investing activities. Here you see the cash flows associated with purchases and sales of non-current assets, such as building and equipment purchases, or sales of investments or subsidiaries.