Net Change in Fixed & Intangible Assets

Category

Cash Flow

Units

Currency

Formula

Disposal of Fixed & Intangible Assets − Acquisition of Fixed & Intangible Assets

US-GAAP elements

PaymentsForProceedsFromProductiveAssets

Reference

ASC 230, Statement of Cash Flows (investing activities)

Source

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

Net change in fixed and intangible assets is the net cash a company spent on long-lived operating assets during a period: cash paid to buy property, plant, equipment, software, and other intangibles, minus cash received from selling such assets. It is a component of the investing section of the cash flow statement and is often referred to as net capital expenditures.

For a company that is investing, the figure is negative. It turns positive only when asset sales exceed new purchases.

ASC 230 generally requires purchases and sales of productive assets to be reported gross, as separate investing lines, so this figure is usually calculated from figures reported in SEC filings. A small number of companies report a single net line, tagged in XBRL as PaymentsForProceedsFromProductiveAssets, which nets buying against selling for physical plant and equipment as well as software and other intangibles. That element is defined as a net payment, so a positive XBRL value represents a net outflow, the opposite of the sign on the printed statement.

The net figure is useful because gross purchases can overstate true investment for companies that regularly sell used assets, such as fleet operators, equipment rental firms, and airlines that sell older aircraft. It can also mislead in the other direction: a single large asset sale, such as selling a headquarters building, can shrink net spending for a period without any change in the company's ongoing investment needs.

Analysts use net capital spending in some free cash flow calculations, particularly for businesses where asset sales are a routine part of operations. GeminIQ's free cash flow uses gross purchases of property and equipment instead, and many analysts do the same, because routine proceeds are small and one-time sales are better excluded. When comparing free cash flow across sources, check whether capital spending is measured gross or net, and whether it includes intangibles.