Investing activities are the acquisition and disposal of non-current assets and other investments not included in cash equivalents.

The separate disclosure of cash flows arising from investing activities is important because the cash flows represent the extent to which expenditures have been made for resources intended to generate future income and cash flows.

Examples of cash flows arising from investing activities are given as follows:

  • Cash payments to acquire property, plant, and equipment, intangibles, and other non-current assets, including recapitalized development costs and self-constructed property, plant, and equipment
  • Cash receipts from sales of property, plant, and equipment, intangibles, and other non-current assets
  • Cash payments to acquire the shares or debentures of other enterprises
  • Cash receipts from the sales of shares or debentures of other enterprises
  • Cash advances and loans to other parties.
  • Cash receipts from the repayment of advances and loans made to other parties

Frequently Asked Questions

What are cash flows from investing activities?

Cash flows from investing activities are the net cash inflows and outflows resulting from a company's investment and divestment activities. These cash flows can be positive or negative, and they impact a company's financial statements in different ways.

How are cash flows from investing activities calculated?

Cash flows from investing activities are typically calculated by subtracting the cash paid for investments (such as property, plant, and equipment) from the cash received from divestments. This calculation gives you the net cash flow resulting from a company's investing activities.

What is an investment activity?

In accounting, investment activities refer to the purchase and sale of long-term assets and other business investments, within a specific reporting period. The results of a company’s reported investing activities give insights into its total investment gains and losses during a defined period.

Are investing activities assets?

Negative cash flow from investing activities means that a company is investing in capital assets. As the value of these assets increases, the amount of net cash flow available to the company over time increases.

What is included in cash flows from investing activities?

Capital expenditures, lending money, and the sale of investment securities are considered “Cash Flow from investing activities” along with expenditures made on company property, plant, and equipment which are a long-term investment.

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