What Is Cash Flow from Investing Activities?

Cash flow from investment activities refers to the cash flow from the purchase, construction and disposal of long-term assets (usually more than one year), including the purchase and construction of fixed assets, long-term investment cash flows, and disposal of long-term asset cash flows, and is classified according to its nature. Listed. Cash flows from investing activities refer to the cash flows from the purchase and construction of long-term assets of an enterprise and investments and their disposal activities that do not include cash equivalents.

Cash flow from investing activities

1) The "cash received for investment recovery" item reflects the cash received by the enterprise for the sale, transfer or maturity recovery of short-term investments other than cash equivalents, long-term equity investments, and the receipt of the principal of long-term debt investment. cash. It does not include interest recovered from long-term debt investments and non-cash assets recovered.

2) The "cash received for investment income" item reflects the cash dividends, profits, and interest that the company has received for various investments.

3) The item "Net cash received from disposal of fixed assets, intangible assets and other long-term assets" reflects the cash obtained by an enterprise for the disposal of fixed assets, intangible assets and other long-term assets, net of related expenses paid for the disposal of these assets After the net amount. Insurance compensation income received due to long-term asset losses such as fixed assets caused by natural disasters is also reflected in this project.

4) The other cash received related to investment activities item reflects the cash inflows related to investment activities received by the enterprise in addition to the above items. If other cash inflows are larger in value, they should be reflected in separate items.

5) The item Cash paid for purchasing and constructing fixed assets, intangible assets and other long-term assets reflects the cash paid by an enterprise for purchasing and constructing fixed assets, obtaining intangible assets and other long-term assets, excluding cash incurred for the purchase and construction of fixed assets. The capitalization of the interest on borrowings, as well as the lease fees paid for financing leased fixed assets, and the borrowing interest and lease payments paid for financing leased fixed assets are separately reflected in the cash flows generated from financing activities. For fixed assets purchased by an enterprise in installments, the cash paid for the first payment is used as the cash outflow from investment activities, and the cash paid for subsequent periods is used as the cash outflow from financing activities.

6) The "cash paid for investment" item reflects the cash paid by the enterprise for various types of investment, including short-term stock investment, cash paid for long-term equity investment, and cash paid for long-term bond investment obtained by the enterprise in addition to cash equivalents. , And additional fees such as commissions and handling fees paid.

It is worth noting that when an enterprise purchases stocks and bonds, the actual payment of the cash dividends that have been declared but not yet received or the interest on the bonds that have reached the interest payment period but have not yet been received shall be paid in the "Pay other The Cash related to investment activities item reflects; the declared cash dividends paid but not yet received or the interest on bonds that have reached the interest payment period but have not yet been paid when recovering the purchase of stocks and bonds, "Investment-related cash" items reflect.

7) The item of other cash paid for investment activities reflects the cash flows related to other investment activities paid by the enterprise in addition to the above. If other cash outflows are of greater value, they should be reflected separately.

Cash flows from investing activities refer to the cash flows from the purchase and construction of long-term assets of an enterprise and investments and their disposal activities that do not include cash equivalents. Investment activities must be consistent with the company's development strategy. For cash flow analysis of investment activities, we mainly start from the following two aspects:

(1) Cash flow from investing activities is less than or equal to zero. In this situation, we cannot arbitrarily think that it is good or bad. We should observe whether this feature is consistent with the development stage of the enterprise and whether it is consistent with the development strategy and direction of the enterprise. Only then can we make further judgments and pay attention to the cash outflow of investment activities. Consistency with corporate investment plans.

(2) Cash flows from investment activities are greater than zero. This situation may be caused by two reasons: one is that the capital recovered by the investment of the enterprise is greater than the cash outflow of the investment; the other is that the enterprise is under pressure from funds to deal with fixed assets in use or long-term investments held. The analysis should be distinguished to find the real cause.