Investment Activity Cash Flow

Definition of Cash Flow From Investing Activities

The term “cash flow from investing activities” is commonly used to describe the monetary gain or loss a business experiences as a result of buying and selling investments.

The cash flow statement heavily includes cash flow from investing activities. One of the four financial statements that businesses compile at year’s end is the cash flow statement.

Investment Activity Cash Flow Explanation

Investing activities result in a positive cash flow if the amount spent on fixed assets and long-term securities is more than the amount gained from selling them.

The four reports consist of:

Cash flow statement

Income and Expenditure Statement

Cash Flow Statement

Report of Equity Variations

The company’s yearly financial performance is laid out in detail in these financial statements.

Both the balance sheet and the income statement detail the assets, liabilities, and capital of a business during a given time period.

The net cash flow of a business is depicted on the statement of cash flow for a given accounting period.

It shows how much money comes into and goes out of the company as a result of its day-to-day operations, investments, and financing.

All purchases and sales of long-term, capital assets that are projected to generate profits in the future are included in the category of cash flow from investment activities. In other words, such investments are made with the hope that they will provide future returns.

Methodology and Structure

Investing is recorded as an intermediate entry between operations and funding on the CFS. The company’s annual net cash flow is the sum of these three figures.

A cash flow statement looks like this:

Proceeds From Operations Cash Flow

This section makes the necessary adjustments to the income statement’s non-cash items in order to convert the net profit to net cash flow from operational activities.

For instance, recouping depreciation and writing off receivables are two examples.

Investment Activity Cash Flow

All cash transactions involving the acquisition or disposition of long-term, non-current assets are included in the category of cash flow from investing (CFI).

Investments in property, plant, and equipment (PPE) are a common part of a growing business, and the CFI area of the cash flow statement is where shareholders and investors can find all the relevant details.

Any money used to buy stocks in other companies that pay dividends is also included here.

Some common types of investment are:

Investing in long-term assets such as land, buildings, and machinery requires spending money.

Cash inflow from selling off fixed and long-term assets like property, plant, and equipment.

Cash is spent on investments like stocks, bonds, and other assets.

Cash inflow from selling investment stocks, bonds, and securities

Spending money to buy companies.

Distributed Loans (Money Out)

Remember that dividends, debt purchases, equity financing, and interest gained or paid are not included in investment activities.

Funds Generated by Investing and Borrowing

Financing activities contribute to a company’s cash flow when they affect the equity and/or liabilities of the business.

Common methods include borrowing loans, issuing and repurchasing shares, and dispersing dividends.

Cash Inflow From Investing Activities: A Calculation


Here we look at Walmart Inc.’s cash flow statement for 2019 as an example.

As you’ll see below, there are three distinct sections to a balance sheet, and investing comes in between operations and finance.

There are three negative cash flows in CFI for Walmart.

Ten billion three hundred forty-four million dollars was spent on IP&E.

acquired companies for $14,656 million,

Expended $431,000,000 on various different forms of investment.

Two positive cash flows resulted from investing activity at the same time:

The sale of infrastructure brought in $519 million.

earned $876 million by selling off divisions

Walmart’s net cash outflow of $24,036 million in investing operations in 2019 suggests the company made a sizable capital expenditure this year.

By deducting the positive cash flow of $1,395 million from the negative cash flow of $25,431 million, we arrive at the net cash used in investing activities.

Although the cash flow from investing activities paints a fairly accurate image of a company’s investments, the income statement and balance sheet are still required for a more complete picture of the firm’s financial health.

A subset of cash flow is known as Cash Flow From Investing Activities.

Read this article to have a deeper understanding of Operating Cash Flow: Proceeds From Operations Cash Flow

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