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International Business Machines Corp (NYSE:IBM)
Cash Flow from Investing
$-3,950 Mil (TTM As of Sep. 2015)

Cash Flow from Investing covers the cash a company gains or spends from investment activities in financial market and operating subsidiaries. It also includes the cash the company used for property, plant and equipment (PPE).

For the three months ended in Sep. 2015, International Business Machines Corp spent $948 Mil on purchasing property, plant, equipment. It gained $132 Mil from selling property, plant, and equipment. It spent $113 Mil on purchasing business. It gained $-569 Mil from selling business. It spent $385 Mil on purchasing investments. It gained $661 Mil from selling investments. It paid $117 Mil for net Intangibles purchase and sale. It paid $0 Mil for discontinued investing activities. And it paid $4 Mil for other investing activities. In all, International Business Machines Corp spent $1,343 Mil on investment activities in financial market and operating subsidiaries for the three months ended in Sep. 2015.


Definition

Cash Flow from Investing covers the cash a company gains or spends from investment activities in financial market and operating subsidiaries. It also includes the cash the company used for property, plant and equipment (PPE).

If a company spends cash on property, plant and equipment (PPE), this will reduce their cash position. This is called Capital Expenditures (CPEX).

Likewise, if a company buys another company for cash, this will reduce their cash position.

International Business Machines Corp's Cash Flow from Investing for the fiscal year that ended in Dec. 2014 is calculated as:

International Business Machines Corp's Cash Flow from Investing for the quarter that ended in Sep. 2015 is calculated as:

International Business Machines Corp Cash Flow from Investing for the trailing twelve months (TTM) ended in Sep. 2015 was -1236 (Dec. 2014 ) + 560 (Mar. 2015 ) + -1931 (Jun. 2015 ) + -1343 (Sep. 2015 ) = $-3,950 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


Explanation

Cash flow from investing contains nine items:

1. Purchase Of Property, Plant, Equipment:
Purchase of PPE indicates the amount used to purchase property, plant, and equipment.

International Business Machines Corp's purchase of property, plant, equipment for the three months ended in Sep. 2015 was $-948 Mil. It means International Business Machines Corp spent $948 Mil on purchasing property, plant, equipment.

In the capital spending for property, plant and equipment (PPE), some part of spending may be from the expansion of business. The business needs more property, plant and equipment (PPE) as it grows. Another part may be from replacement of the property, plant and equipment (PPE) of existing business. For some companies, the cash spent on replacing of the property, plant and equipment (PPE) of the existing business will be close to the depreciation of property, plant and equipment (PPE) reported in the income statement.

In Warren Buffett’s definition of “Owner’s Earnings”, he deducts the estimate of the cost of replacing the property, plant and equipment (PPE) of the existing business from cash flow from operations. The cash spent on the new property, plant, and equipment is not deducted. The reason is because these are not costs of the existing business. In his 1986 letter to shareholders, Warren Buffett wrote this about owner earnings:

"These represent (a) reported earnings plus (b) depreciation, depletion, amortization, and certain other non-cash charges...less (c) the average annual amount of capitalized expenditures for plant and equipment, etc. that the business requires to fully maintain its long-term competitive position and its unit volume....Our owner-earnings equation does not yield the deceptively precise figures provided by GAAP, since (c) must be a guess - and one sometimes very difficult to make. Despite this problem, we consider the owner earnings figure, not the GAAP figure, to be the relevant item for valuation purposes...All of this points up the absurdity of the 'cash flow' numbers that are often set forth in Wall Street reports. These numbers routinely include (a) plus (b) - but do not subtract (c)."

2. Sale Of Property, Plant, Equipment:
Sale of PPE indicates the amount gained from selling property, plant, and equipment.

International Business Machines Corp's sale of property, plant, equipment for the three months ended in Sep. 2015 was $132 Mil. It means International Business Machines Corp gained $132 Mil from selling property, plant, and equipment.

3. Purchase Of Business:
Purchase of business indicates the amount used to purchase business.

International Business Machines Corp's purchase of business for the three months ended in Sep. 2015 was $-113 Mil. It means International Business Machines Corp spent $113 Mil on purchasing business.

4. Sale Of Business:
Sale of business indicates the amount gained from selling business.

International Business Machines Corp's sale of business for the three months ended in Sep. 2015 was $-569 Mil. It means International Business Machines Corp gained $-569 Mil from selling business.

5. Purchase Of Investment:
Purchase of Investments represents cash outflow on the purchase of investments in securities.

International Business Machines Corp's purchase of investment for the three months ended in Sep. 2015 was $-385 Mil. It means International Business Machines Corp spent $385 Mil on purchasing investments.

6. Sale Of Investment:
Sale of Investments represents cash inflow on the sale of investments in securities.

International Business Machines Corp's sale of investment for the three months ended in Sep. 2015 was $661 Mil. It means International Business Machines Corp gained $661 Mil from selling investments.

7. Net Intangibles Purchase And Sale:
Net Intangibles purchase and sale means the net cash inflow received by a company that comes from the purchase and sale of intangibles. It equals the cash received from sale of intangibles minus the cash spent on purchasing intangibles.

International Business Machines Corp's net Intangibles purchase and sale for the three months ended in Sep. 2015 was $-117 Mil. It means International Business Machines Corp paid $117 Mil for net Intangibles purchase and sale.

8. Cash From Discontinued Investing Activities:
Cash from discontinued investing activities means the cash received by a company that comes from the discontinued investing activities.

International Business Machines Corp's cash from discontinued investing activities for the three months ended in Sep. 2015 was $0 Mil. It means International Business Machines Corp paid $0 Mil for discontinued investing activities.

9. Cash From Other Investing Activities:
Cash from other investing activities means the cash received by a company that comes from other investing activities.

International Business Machines Corp's cash from other investing activities for the three months ended in Sep. 2015 was $-4 Mil. It means International Business Machines Corp paid $4 Mil for other investing activities.


Related Terms

Cash Flow from Operations, Cash Flow from Financing, Cash Flow for Capital Expenditures, Purchase of PPE, Sale of PPE, Purchase of Business, Sale of Business, Purchase of Investment, Sale of Investment, Net Intangibles Purchase And Sale, Cash From Discontinued Investing, Cash From Other Investing


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

International Business Machines Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
PurchaseOfPPE -4,362-4,630-4,171-3,447-4,185-4,108-4,082-3,623-3,7400
SaleOfPPE 4305373503307706084103724040
PurchaseOfBusiness -3,799-1,009-6,313-1,194-5,922-1,811-3,722-3,056-6560
SaleOfBusiness 03107140055145992972,3570
PurchaseOfInvestment -28,555-24,117-4,590-5,604-6,129-1,594-4,109-4,608-2,3380
SaleOfInvestment 25,54224,9846,1003,5997,8773,3453,1424,8732,4930
NetIntangiblesPurchaseAndSale 000-630-569-559-635-517-4430
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities -805-750-732-183-404-291-607-1,064-1,0780
Cash Flow from Investing -11,549-4,675-9,285-6,729-8,507-4,396-9,004-7,326-3,0010

International Business Machines Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
PurchaseOfPPE -985-1,064-849-908-1,036-947-857-865-9480
SaleOfPPE 751167410914279471351320
PurchaseOfBusiness -2,383-494-264-339-47-6-148-560-1130
SaleOfBusiness 2355039117811,8681962-5690
PurchaseOfInvestment -583-890-477-359-677-825-819-897-3850
SaleOfInvestment 1,2768386086345237288166486610
NetIntangiblesPurchaseAndSale -131-111-112-110-114-107-113-177-1170
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities -51-1,348664-44328-2,0261,615-277-40
Cash Flow from Investing -2,547-2,90335-1,000-800-1,236560-1,931-1,3430
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