cash flow from investing activites

CFA Level II
#1

Why is the cash flow from investing activities noted as a negative value on the CF statement?

#2

It isn’t always negative, but it is often negative.

Do you want to see a company growing, or shrinking?

#3

when a company receives cash from investors, is it designated as positive or negative transaction on the investing activities portion of the CF statement?

#4

Neither.

It’s a cash inflow from _ Financing _.

#5

Say we have CF from investing activities of $-10,000. Which would entail we have made more cash investment purchases than cash sales of those investments.

Why would we have to subtract off-10,000 in computing the accruals ratio from the CF statement?

I do not understand the logic.

Thanks

#6

Being able to invest $10,000 is a good thing; it suggests that we have more than enough cash flow to keep the company running. Therefore, we add $10,000 to the numerator of the cash flow accrual ratio, increasing the ratio.

#7

Basically:

Negative CFI meaning: more investing outflow than inflow

Positive CFI meaning: more investing inflow than outflow