Cash Flow from Investing Activities

Category

Cash Flow

Units

Currency

US-GAAP elements

NetCashProvidedByUsedInInvestingActivitiesNetCashProvidedByUsedInInvestingActivitiesContinuingOperations

Reference

ASC 230, Statement of Cash Flows (investing activities)

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Cash from investing activities, also called cash flow from investing activities, is the net cash a company spent on, or received from, long-term assets and investments during a period. It covers buying and selling property and equipment, acquiring and selling businesses, purchasing and selling securities, and making and collecting loans. It is the second section of the cash flow statement.

For most healthy companies the figure is negative, because they are spending to maintain and grow their asset base. A positive figure usually means asset sales or investment maturities exceeded new spending.

ASC 230 describes investing activities as acquiring and disposing of productive assets such as property, plant, and equipment, acquiring and disposing of debt and equity instruments of other entities, and lending money and collecting the principal. In XBRL, companies tag the total NetCashProvidedByUsedInInvestingActivities, which includes discontinued operations, and NetCashProvidedByUsedInInvestingActivitiesContinuingOperations when they separate the two. Cash flows are generally reported gross, so purchases and sales of the same kind of asset appear as separate lines, but ASC 230 permits net reporting for items that turn over quickly, are large, and have short maturities.

Some classifications are worth knowing. Interest and dividends received are operating, not investing, under US GAAP. Distributions from equity-method investees that represent a return of the investment are investing, while those that represent a return on it are operating. Assets acquired with debt, through finance leases, or by issuing stock are noncash transactions and do not appear here at all; they are disclosed separately.

Because the total mixes very different activities, analysts usually break it apart. Capital expenditures reflect ongoing reinvestment; acquisitions are lumpy and discretionary; purchases and sales of marketable securities often just move cash between accounts. A large technology company can show heavy investing outflows simply by shifting cash into longer-dated securities, which does not signal growth investment at all.