Definition
Investing Cash Flow
Investing cash flow is the cash a company spends on or receives from buying and selling long-term assets and investments.
This section of the cash flow statement captures capex on property, plant and equipment, acquisitions, and purchases or sales of investments. Heavy negative investing cash flow often signals a company in an expansion phase, building capacity for future growth.
Reading investing cash flow alongside operating cash flow reveals whether a company funds its capex from internally generated cash or relies on borrowing, shown in financing cash flow. Sustained capex that exceeds operating cash flow can stress the balance sheet over time.
Related terms
- Capital Expenditure (Capex)Capex is the money a company spends on acquiring or upgrading long-term assets like plants, machinery, and equipment to grow or maintain operations.
- Cash Flow StatementThe cash flow statement reconciles a company's profit to its actual cash movements, split into operating, investing and financing activities.
- Operating Cash FlowOperating cash flow is the cash a company generates from its core business operations, before investing and financing activities.
- Financing Cash FlowFinancing cash flow is the cash a company raises from or returns to its capital providers — through debt, equity, dividends and buybacks — and is one of the three sections of the cash-flow statement.
Plain-English explainer from Investdesk Investors Encyclopedia. General information, not financial advice.