Lesson 02 — Cash from Investing (CFI)
Week 06 · Lesson 2 of 4 · Week 06 — Cash Flow Basics
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CFI = cash spent on or received from longterm assets and investments. | Outflows (negative) | Inflows (positive) | ||| | Buying PPE (capex) | Selling propert...
What is CFI?
CFI = cash spent on or received from long-term assets and investments.
Common CFI items
| Outflows (negative) | Inflows (positive) |
|---|---|
| Buying PPE (capex) | Selling property/equipment |
| Acquiring subsidiaries | Selling investments |
| Buying financial investments | Interest/dividends received |
Capex — the most important investing item
Capital Expenditure (Capex) = money spent on PPE, new plants, equipment.
- Capex is future-focused — it builds capacity
- Maintenance capex: replacing worn-out equipment (just to stay in place)
- Growth capex: new factories, new capacity (to grow)
Normally negative
A growing company should have negative CFI — it's investing in the future. An established company with minimal capex may be coasting.
What to look for
- Huge capex spike — big expansion coming, payoff expected in 2-3 years
- CFI turning positive — company selling assets. Why? Raising cash due to stress, or divesting non-core businesses?
- Capex as % of CFO — if > 80%, is the company over-investing?
Key takeaway
CFI tells you whether a company is building for the future or harvesting existing assets.