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12 April, 10:39

Milliken Company paid $2.2 million to purchase stock in another company, $1.0 million to repurchase treasury shares, $0.5 million to buy short-term investments, sold used equipment for $0.8 million when its book value was $0.6 million, and purchased new equipment for $3.4 million. What was the net cash flow from investing activities

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  1. 12 April, 10:58
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    Net investing cash flow = $5,300,000 outflow

    Explanation:

    Purchase Stock in another company = $2,200,000 (outflow)

    +Short term investment purchase = $500,000 (outflow)

    -Equipment sales proceed = $800,000 (inflow)

    +Equipment purchase = $3,400,000 (outflow)

    Net cash flow from Investing activities = $5,300,000 (outflow)

    Net investing cash flow = $5,300,000 outflow

    Net cash flow is derived by summing up any money received from the sale of assets, stocks and bonds or paying back loans. Subtraction of money paid out to buy assets, make loans or buy stocks and bonds, he total is the figure that gets reported on the cash flow statement as Net Cash Flow.
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