Cash Flow from Investing Activities

Cash flow from investing activities (CFI) is a section of the cash flow statement that reports cash generated or spent on investment-related transactions during a reporting period. It shows how a company allocates cash to long-term assets and investments that affect future operations and growth.

What counts as investing activities

Investing activities typically include cash flows related to:
* Purchases and sales of property, plant, and equipment (PPE)
* Capital expenditures (CapEx)
* Purchases and sales of marketable securities or other investments
* Proceeds from maturities of investments
* Cash paid for acquisitions or received from disposals of businesses or long‑term assets

Purchases are cash outflows (negative CFI); sales and maturities are inflows (positive CFI).

How CFI fits with other cash flow sections

The cash flow statement has three sections:
* Operating activities — cash from core day‑to‑day business (sales, operating expenses, working capital).
* Investing activities — cash used for or provided by long‑term asset and investment decisions.
* Financing activities — cash from or used to fund the company (debt, equity, dividends, buybacks).

Analyze the cash flow statement together with the balance sheet and income statement to understand a company’s liquidity, investment strategy, and financial health.

Example (illustrative)

An example cash flow profile from a large tech company over a 12‑month period included:
Negative (outflows):
* Purchases of marketable securities: $29.52 billion
* Payments for property, plant, and equipment: $10.96 billion
* Other investing payments: $1.34 billion

Positive (inflows):
* Proceeds from maturities of marketable securities: $39.69 billion
* Proceeds from sale of marketable securities: $5.83 billion

Net cash flow from investing activities in this example: $3.71 billion (positive), despite substantial purchases.

How to calculate CFI

CFI = Sum of cash inflows from investing activities − Sum of cash outflows on investing activities

Example calculation:
* CapEx: −$30B
* Purchases of investments: −$5B
* Acquisitions: −$1B
* Sales of investments: +$3B
Net CFI = −$30B − $5B − $1B + $3B = −$33B

Interpreting investing cash flow

• Negative CFI is common and not always bad. It often indicates investment in growth (CapEx, acquisitions, R&D) that may reduce cash now but increase future cash generation.
• Positive CFI can indicate asset sales or maturities of investments; if persistent, it may signal underinvestment.
• Assess CFI alongside operating cash flow: healthy growth usually combines investment spending with strong operating cash generation or sustainable financing.

Key takeaways

• CFI reports cash used for or provided by long‑term investments and asset transactions.
• It can be positive or negative; context matters—negative CFI often reflects growth investment, while positive CFI can reflect divestitures.
• Review CFI together with operating and financing cash flows, and compare trends over time to evaluate a company’s investment strategy and financial health.