Understanding Fundamentals
Part of a cash flow statement shows the cash flow from all investing activities, which usually contain purchases or sales of long-term assets, such as plant, equipment and property, as well as investment securities. If a firm buys a piece of machinery, the cash flow statement would echo this activity as a cash outflow from investing activities because it used cash. If the company determined that it needs to sell off some investments from an investment portfolio, the proceeds from the sales would show up as a cash inflow from investing activities because it provided cash.
Understanding a cash flow statement is key to understanding the fundamentals of a company.