======Cash Flow from Investing (CFI)======
Cash Flow from Investing (CFI) is a crucial section of a company's [[Statement of Cash Flows]] that reveals how it's using its money for long-term growth. Think of it as the company's financial diary for its major shopping sprees and asset sales. It tracks the net amount of cash spent or generated from a company's investment-related activities over a specific period. These aren't your everyday operational expenses; we're talking about big-ticket items like buying new factories, selling off old equipment, or purchasing stocks and bonds in other firms. A positive CFI means more cash came in from selling investments than went out, while a negative CFI means the company spent more on investments than it sold. For an investor, understanding this flow is vital because it peels back the curtain on management's long-term strategy and its commitment to creating future value.
===== Decoding the CFI Section =====
The CFI section is a straightforward tally of cash coming in and cash going out from investment activities. It generally boils down to two categories.
==== Cash Inflows (Sources of Cash) ====
When cash flows //into// the company from its investing activities, it’s a cash inflow. These are the typical sources:
  * Selling long-term assets: This includes offloading [[Property, Plant, and Equipment]] (PP&E) like buildings, vehicles, or machinery.
  * Selling investment securities: When a company sells its holdings of another company's stocks or bonds.
  * Collecting loan principals: If the company previously lent money to another entity, the repayment of that loan's principal is a cash inflow.
==== Cash Outflows (Uses of Cash) ====
Cash outflows are the mirror image—money spent on investments. This is where you see a company putting its capital to work:
  * Purchasing long-term assets: This is the big one, known as [[Capital Expenditures]] (CapEx). It includes buying new PP&E to expand or upgrade operations.
  * Purchasing investment securities: Buying stocks or bonds of other companies or making strategic acquisitions.
  * Making loans to others: When the company acts like a bank and lends money to other businesses or entities.
===== The Value Investor's Perspective =====
For a value investor, CFI isn't just a number; it's a story about management's capital allocation skill. Is the company building a fortress or selling the bricks to stay afloat?
==== Negative CFI: A Sign of Growth? ====
Don't be alarmed by a negative CFI! In fact, for a healthy, growing company, a consistently negative number is often a **fantastic sign**. It shows that management is reinvesting cash back into the business by purchasing new assets (CapEx) to fuel future growth. This spending on PP&E is a primary driver for increasing a company's long-term earning power. A company that isn't spending on its future is a company that's standing still. This CapEx figure is also a critical component in calculating a company's [[Free Cash Flow]] (FCF), the lifeblood of any business from a value investor's standpoint.
==== Positive CFI: A Red Flag or a Smart Move? ====
A positive CFI requires more detective work. If the company is raising cash by selling assets, you need to ask why.
  * **The Good**: A company might be selling off an unprofitable division or non-essential assets to focus on its core, high-return business. This is smart capital allocation and a positive strategic move.
  * **The Bad**: A consistently positive CFI could signal that a company is in distress, forced to sell its productive assets just to generate enough cash to survive. This is like selling your family silver to pay the bills—not a sustainable strategy.
  * The key is to look at the //context//. Was it a one-time, strategic sale, or is it a recurring pattern of liquidation?
==== Connecting the Dots ====
CFI doesn't exist in a vacuum. The purchase or sale of an asset reported in this section will directly affect the asset accounts on the [[Balance Sheet]]. Furthermore, if an asset is sold for more or less than its book value, the resulting gain or loss will appear on the [[Income Statement]]. By looking at all three statements together, you get a complete and coherent picture of the company's financial health and strategic direction.