Cash Flow from Investing Activities

This type of CF is also essential because it represents its capital flow, which can be considered a long-term investment. These include land, buildings, other real estate, machinery, implements, etc. Investment activities also include long-term investments in other companies. This is a slightly different situation from the previous type of CF. In this case, we want to see a negative CF from this activity. So it’s great that the company invests, buys because it ensures its operation and development. So negative value is what we would love to see. 


Source: SeekingAlpha

If the CF from Investing Activities is positive, the company sells its long-term investments, land, shares, and so on. It doesn’t have to be serious if the CF from Operating Activities is positive. This could be the case because the company wants to get rid of certain investments and has them well analyzed. BUT. If a company has a negative CF from its core business and a CF from Investing Activities is positive, this can pose a significant risk in the medium term. It would mean that the company cannot earn enough money through its core business but has to sell its investments (fixed assets, shares etc.).

The best-case scenario is if the company has a positive CF from Operations and a negative CF from Investing Activities. In this case, we can say that the company creates enough CF from its core business, and at the same time, it manages to invest successfully.

The appendix above shows that Apple also has a solid CF from investing activities, primarily negative, what is appreciated. In two years, however, the company had a positive one, most likely due to the sale of its shares in other companies. However, we can also say that Apple is investing less and less. We can compare this with the situation several years ago, where we have seen a significantly more negative CF from this section. We can conclude that the investments of this company were higher in the past, but are solid right now.


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