Cash Flow from Investing Activities includes 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 which arises from investing activities are:
- Cash receipts from 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 cash of insurance claims of third parties
- Cash receipt from 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 activity will be:
Explanation : –
Cash Flow from Investing Activities : Example 2
Cash flow from investing activity 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 in 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 : –
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