What Are the Activities Included in the Cash Flow Statement?

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Examples of cash inflow from investing activities:

By analyzing the cash flow statement, retained earnings investors can determine whether the company has enough cash to pay dividends, invest in new projects, and repay debt. Financing Activities refer to the cash inflows and outflows that result from the financing of the business. These activities include cash inflows from the issuance of debt and equity securities and cash outflows from the repayment of debt and payment of dividends. While preparing the statement of cash flows, the treatment of amortization of intangible assets is similar to the treatment of depreciation on fixed assets. It is a non-cash expense and is added back to the net income in the operating activities section under the indirect method.

ACCOUNTING for Everyone

• In its 10-K filing with the Securities and Exchange Commission (SEC), the company details that it spends money to remodel existing stores and build new ones, as well as to acquire the land to build on.
• The cash flows arising from such activities are shown under the investing activities section.
• They can use the information to make informed decisions about managing the company’s finances.
• The acquisition or sale of long-term assets and investments during a specific period can be determined by analyzing their opening and closing balances.

As an Investopedia fact checker since 2020, he has validated over 1,100 articles on a wide range of financial and investment topics. Andy Smith is a Certified Financial Planner (CFP®), licensed Bakery Accounting realtor and educator with over 35 years of diverse financial management experience. He is an expert on personal finance, corporate finance and real estate and has assisted thousands of clients in meeting their financial goals over his career. These materials were downloaded from PwC’s Viewpoint (viewpoint.pwc.com) under license. HighRadius is redefining treasury with AI-driven tools like LiveCube for predictive forecasting and no-code scenario building. Its Cash Management module automates bank integration, global visibility, cash positioning, target balances, and reconciliation—streamlining end-to-end treasury operations.

Deduction Management

Cash flows from operating are generally the cash effects of transactions and other events that enter into the determination of net income. Big Brand Company purchased 2,000 shares of Company A at $50 per share during the year 2023 for investment purpose. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. David is comprehensively experienced in many facets of financial and legal research and publishing.

Cash flows resulting from the financing activities of the company are shown under the financing activities section of the statement of cash flows. Besides this, short-term loans obtained from commercial banks or other financial institutions with the purpose of acquiring capital or funding the company’s business are also considered a financing activity. Cash flow from investing activities (CFI) is one section of a company’s cash flow statement. It reports how much cash has been generated or spent from investment-related activities in a specific period. Investing Activities refer to the cash inflows and outflows that result from the purchase and sale of long-term assets such as property, plant, and equipment, and investments in other companies.

• Andy Smith is a Certified Financial Planner (CFP®), licensed realtor and educator with over 35 years of diverse financial management experience.
• Notice how every year the company has “Investments in Property & Equipment,” which are its capital expenditures.
• Any moderation in the cash position of a company that involves fixed assets, investments in securities, mergers, and acquisitions would be accounted for under cash from investing activities.
• A cash flow statement is an essential financial statement that provides a clear picture of a company’s financial health.
• The net cash flows from operating activities can be determined using either the direct or indirect method.
• This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.