Cash Flow From Investing Activities
Cash Flow from Investing Activities includes the flow of cash which arises due to purchase or sale of fixed assets like land, building, plant & machinery, etc. It is an important aspect of growth and capital. It includes only cash transactions and not any credit transactions.
Examples of cash flow that arises from investing activities are:
- Cash receipts from the sale of fixed assets
- Payment made in cash to acquire fixed assets
- Cash advances and loans made to third parties
- Payments made in cash to acquire shares, warrants, or debt instruments of other enterprises
- Cash received on account of interests and dividends
- Receipts in case of insurance claims of third parties
- Cash receipt from the sale of fixed assets
Cash Flow from Investing Activities: Example 1
Following is the information available from the books of Akash Ltd.
Cash flow from investing activities will be:
Explanation: –
Cash Flow from Investing Activities: Example 2
Cash flow from investing activities from the following information will be:
Explanation: –
Cash Flow from Investing Activities: Example 3
Following is the information available from ABC Ltd
Additional information:
1 Half of the investment held at the beginning of the year was sold at a profit of 2 %.
2 Depreciation on Fixed Assets was Rs 100000 for the year
3 Interest received on investment was Rs 90000
4 Dividend received on investment Rs 70000
Cash flow from investing activities will be:
Explanation: –
Chapter 6 – Cash Flow Statement