Question

XYZ Co. provides the following information for the year 2016. Issue common stock for $28,000, sell factory machines for $3,000, pay cash dividends of $3,000, purchase common shares of Zillow Co. for $10,000, pay accounts payable of $4,000. What was the net cash inflow (outflow) from investing activities?

Answer 1

Answer:

Cash flow from investing= -$7,000

It is an outflow.

Explanation:

Cash from investing activity is defined as the cash in flow or outflow from purchase of long term assets such as property, equipment, investment in securities, sale of securities, and purchase of plant. It is the second section of the cash flow statement

Negative cash flow from investing activity might indicate heavy investment on long term growth of the company. For example investment in research and development.

Sale of fixed asset is positive cash flow of $3,000

Purchase of common shares of Zillow co. is a negative cash flow of $10,000

Cash flow from investing= 3,000- 10,000

Cash flow from investing= -$7,000