One of the components of the cash flow statement is the cash flow from investing . These activities are represented in the investing income part of the income statement. This information shows both companies generated significant amounts of cash from daily operating activities; $4,600,000,000 for The Home Depot and $3,900,000,000 for Lowe’s. It is interesting to note both companies spent significant amounts of cash to acquire property and equipment and long-term investments as reflected in the negative investing activities amounts. For both companies, a significant amount of cash outflows from financing activities were for the repurchase of common stock. Apparently, both companies chose to return cash to owners by repurchasing stock.

Investing activities in accounting refers to the purchase and sale of long-term assets and other business investments, within a specific reporting period. A business’s reported investing activities give insights into the total investment gains and losses it experienced during a defined period. Investing activities are a crucial component of a company’s cash flow statement, which reports the cash that’s earned and spent over a certain period of time.

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Cash Flow From Investing Activities is one of the categories of cash flow. Below are an example and screenshot of what this section looks like in a financial model. Notice how every year the company has “Investments in Property & Equipment,” which are its capital expenditures. There are no acquisitions (“Investments in Businesses”) in any of the years; however, it is there as a placeholder.

This section exposes you to one of the four major financial statements, the “Statement of Cash Flows”. It explains how to create and interpret the statement and discusses the three major activities that produce cash for a firm – operating, investing, and financing. It would appear as investing activity because purchase of equipment impacts noncurrent assets.

What are the main components of cash flow from investing activities?

Shareholders’ equity transactions, like issuing of shares, payment of dividends, and share buybacks are very common financing activities. Debt transactions, such as issuance of debt, and the related repayment of debt, are also frequent financing events. It is important to note that although dividend payments to shareholders are considered as a financing activity, payments of interest to creditors are not. Cash flows from investing activities always relate to non-current asset transactions and may involve increases or decreases in cash relating to these transactions. The following section discusses specifics regarding preparation of these two non-operating sections.

If a current liability’s balance had increased, the amount of the increase is added to the amount of net income. The increase investing activities in a current liability had a positive/favorable effect on the company’s cash balance. Depreciation and amortization 63,000.