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Red Hat, Inc. (NYSE:RHT)
Cash Flow from Investing
$-108 Mil (TTM As of Feb. 2014)

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 Feb. 2014, Red Hat, Inc. spent $18 Mil on purchasing property, plant, equipment. It gained $0 Mil from selling property, plant, and equipment. It spent $0 Mil on purchasing business. It gained $0 Mil from selling business. It spent $324 Mil on purchasing investments. It gained $166 Mil from selling investments. It paid $5 Mil for net Intangibles purchase and sale. It paid $0 Mil for discontinued investing activities. And it paid $0 Mil for other investing activities. In all, Red Hat, Inc. spent $180 Mil on investment activities in financial market and operating subsidiaries for the three months ended in Feb. 2014.


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.

Red Hat, Inc.'s Cash Flow from Investing for the fiscal year that ended in Feb. 2014 is calculated as:

Red Hat, Inc.'s Cash Flow from Investing for the quarter that ended in Feb. 2014 is calculated as:

Red Hat, Inc. Cash Flow from Investing for the trailing twelve months (TTM) ended in Feb. 2014 was 167.378 (May. 2013 ) + -97.648 (Aug. 2013 ) + 2.289 (Nov. 2013 ) + -180.281 (Feb. 2014 ) = $-108 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.

Red Hat, Inc.'s purchase of property, plant, equipment for the three months ended in Feb. 2014 was $-18 Mil. It means Red Hat, Inc. spent $18 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.

Red Hat, Inc.'s sale of property, plant, equipment for the three months ended in Feb. 2014 was $0 Mil. It means Red Hat, Inc. gained $0 Mil from selling property, plant, and equipment.

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

Red Hat, Inc.'s purchase of business for the three months ended in Feb. 2014 was $0 Mil. It means Red Hat, Inc. spent $0 Mil on purchasing business.

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

Red Hat, Inc.'s sale of business for the three months ended in Feb. 2014 was $0 Mil. It means Red Hat, Inc. gained $0 Mil from selling business.

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

Red Hat, Inc.'s purchase of investment for the three months ended in Feb. 2014 was $-324 Mil. It means Red Hat, Inc. spent $324 Mil on purchasing investments.

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

Red Hat, Inc.'s sale of investment for the three months ended in Feb. 2014 was $166 Mil. It means Red Hat, Inc. gained $166 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.

Red Hat, Inc.'s net Intangibles purchase and sale for the three months ended in Feb. 2014 was $-5 Mil. It means Red Hat, Inc. paid $5 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.

Red Hat, Inc.'s cash from discontinued investing activities for the three months ended in Feb. 2014 was $0 Mil. It means Red Hat, Inc. 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.

Red Hat, Inc.'s cash from other investing activities for the three months ended in Feb. 2014 was $-0 Mil. It means Red Hat, Inc. paid $0 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.

Red Hat, Inc. Annual Data

Feb05Feb06Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14
PurchaseOfPPE -15-17-23-42-24-28-33-46-86-80
SaleOfPPE 0000000000
PurchaseOfBusiness 000-12-148-2-31-135-1360
SaleOfBusiness 0000000000
PurchaseOfInvestment -854-523-593-1,173-397-667-751-963-875-773
SaleOfInvestment 5305037821,162720426771792741764
NetIntangiblesPurchaseAndSale 000-6-4-5-14-5-34-18
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities -21-25-150-00-04-11-2
Cash Flow from Investing -361-6217-70146-276-55-359-389-108

Red Hat, Inc. Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
PurchaseOfPPE -11-15-16-20-28-21-27-22-13-18
SaleOfPPE 0000000000
PurchaseOfBusiness -13500-10-21-1040000
SaleOfBusiness 0000000000
PurchaseOfInvestment -330-232-323-185-123-244-130-217-102-324
SaleOfInvestment 197213228190170154326154118166
NetIntangiblesPurchaseAndSale -1-1-3-24-6-2-2-10-1-5
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities -210-0-000-2-0-0
Cash Flow from Investing -281-34-113-50-9-218167-982-180
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