A positive net cash flow from investing activities indicates position

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It is not necessary that the outcome of cash flow from any activity must be positive. Because it depends on the strategy of the business carried out by the management. Suppose the company acquire loans or issue shares to the market.

It results in a positive cash flow. And when a company boosts their sales by offering credit to the market or increasing their inventory level due to some reasons then it is possible that the cash flow from operating activities becomes negative. Similarly, the case is with the investing activities. If the company make purchase some fixed assets then the cash flow from investing activities may go negative.

Cash flow from investing activities is affected by the selling and purchasing of any fixed asset of the company. When the company buys any fixed asset during the period, it affects the cash flow negatively because there is an outflow of cash from the organization. It is absolutely very normal activity because when u look at the balance sheet. The current asset is converted to a long-term asset. The journal entry can give you more information.

For Example. So we can say that the negative balance is very much positive in its effect. Which is useful for the company in the long run. Post navigation. Example 2 Let us take the example of Apple Inc. F from investing activities for the year F from Investing Activities for is calculated as, C.

The items included in this section may vary from company to company. However, some of the common items included under C. F from investing activities is an important section in the cash flow statement of a company as it shows how much of the money generated from operations is used for investment and under which head. The section is more critical in evaluating companies operating in capital-intensive industries that predominantly require enormous investments in fixed assets.

Typically, suppose a business reports regular cash outflows to purchase fixed assets.