Increase in Long-Term Investments

Category

Cash Flow

Units

Currency

US-GAAP elements

PaymentsToAcquireLongtermInvestmentsPaymentsToAcquireInvestmentsPaymentsToAcquireOtherInvestments

Reference

ASC 230, Statement of Cash Flows (investing activities); ASC 320 and ASC 321

Source

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

Increase in long-term investments is the cash a company spent during a period buying investments it expects to hold beyond the current operating cycle, such as longer-dated bonds and notes, equity securities of other companies, and other financial assets. It is an outflow in the investing section of the cash flow statement.

These purchases move cash into other assets rather than consuming it. The company still owns the value, now in the form of securities.

ASC 230 classifies purchases of debt and equity instruments of other entities as investing activities. Debt securities are accounted for under ASC 320 as held-to-maturity, available-for-sale, or trading, and equity securities under ASC 321. Cash flows for held-to-maturity and available-for-sale securities are investing; trading securities are classified according to the purpose for which they were acquired. In XBRL, companies use PaymentsToAcquireLongtermInvestments for investments meant to be held past the operating cycle, PaymentsToAcquireInvestments when all investment purchases are combined, and PaymentsToAcquireOtherInvestments for investments not covered by more specific elements.

The boundary between long-term and short-term investments is not uniform. Many companies report a single "purchases of marketable securities" line covering maturities of all lengths, so a clean long-term figure is not always available. Equity-method stakes in joint ventures and affiliates are usually reported on their own line, and business acquisitions are always separate. Banks and insurers report investment purchases on a very different scale, since managing a securities portfolio is part of their core business.

For industrial and technology companies, this line mostly reflects treasury management. A company with a large cash pile may buy longer-dated securities to earn more yield, which shows up as heavy investing outflows even though its liquidity has barely changed. Analysts therefore treat investment purchases separately from capital expenditures and acquisitions, and often combine cash, short-term investments, and long-term marketable securities to measure total liquid resources.