What are cash flows from investing activities?

Cash flows from investing activities is a line item in the statement of cash flows, which is one of the documents comprising a company's financial statements. This line item contains the sum total of the changes that a company experienced during a designated reporting period in investment gains or losses, as well as from any new investments in or sales of fixed assets.

Items that may be included in the investing activities line item are:

• Purchase of fixed assets (negative cash flow)
• Sale of fixed assets (positive cash flow)
• Purchase of investment instruments, such as stocks and bonds (negative cash flow)
• Sale of investment instruments, such as stocks and bonds (positive cash flow)
• Lending of money (negative cash flow)
• Collection of loans (positive cash flow)
• Proceeds of insurance settlements related to damaged fixed assets (positive cash flow)

The cash flows from investing activities line item is one of the more important items on the statement of cash flows, for it can be a substantial source or use of cash that significantly offsets any positive or negative amounts of cash flow generated from operations.

Related Topics

Direct method
Indirect method
How to prepare a cash flow statement
Statement of cash flows overview
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