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Diageo PLC (NYSE:DEO)
Cash Flow from Investing
$-1,894 Mil (TTM As of Dec. 2013)

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 six months ended in Dec. 2013, Diageo PLC spent $565 Mil on purchasing property, plant, equipment. It gained $105 Mil from selling property, plant, and equipment. It spent $692 Mil on purchasing business. It gained $0 Mil from selling business. It spent $2 Mil on purchasing investments. It gained $0 Mil from selling investments. It paid $0 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, Diageo PLC spent $1,153 Mil on investment activities in financial market and operating subsidiaries for the six months ended in Dec. 2013.


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.

Diageo PLC's Cash Flow from Investing for the fiscal year that ended in Jun. 2013 is calculated as:

Diageo PLC's Cash Flow from Investing for the quarter that ended in Dec. 2013 is calculated as:

For company reported semi-annually, GuruFocus uses latest annual data as the TTM data. Diageo PLC Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2013 was $-1,894 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.

Diageo PLC's purchase of property, plant, equipment for the six months ended in Dec. 2013 was $-565 Mil. It means Diageo PLC spent $565 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.

Diageo PLC's sale of property, plant, equipment for the six months ended in Dec. 2013 was $105 Mil. It means Diageo PLC gained $105 Mil from selling property, plant, and equipment.

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

Diageo PLC's purchase of business for the six months ended in Dec. 2013 was $-692 Mil. It means Diageo PLC spent $692 Mil on purchasing business.

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

Diageo PLC's sale of business for the six months ended in Dec. 2013 was $0 Mil. It means Diageo PLC gained $0 Mil from selling business.

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

Diageo PLC's purchase of investment for the six months ended in Dec. 2013 was $-2 Mil. It means Diageo PLC spent $2 Mil on purchasing investments.

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

Diageo PLC's sale of investment for the six months ended in Dec. 2013 was $0 Mil. It means Diageo PLC gained $0 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.

Diageo PLC's net Intangibles purchase and sale for the six months ended in Dec. 2013 was $0 Mil. It means Diageo PLC paid $0 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.

Diageo PLC's cash from discontinued investing activities for the six months ended in Dec. 2013 was $0 Mil. It means Diageo PLC 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.

Diageo PLC's cash from other investing activities for the six months ended in Dec. 2013 was $-0 Mil. It means Diageo PLC 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.

Diageo PLC Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
PurchaseOfPPE -525-474-558-652-581-572-677-755-976-1,096
SaleOfPPE 314314113123219766159137
PurchaseOfBusiness 000-1,143-167-315-157-2,215-977-915
SaleOfBusiness 000822558003
PurchaseOfInvestment 00-120-39-660000
SaleOfInvestment 00080000012
NetIntangiblesPurchaseAndSale 0000000000
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities 1,6381,038-237-99-8202-2-0-0
Cash Flow from Investing 1,144607-666-1,748-845-732-701-2,832-1,894-1,858

Diageo PLC Semi-Annual Data

Dec09Jun10Dec10Jun11Dec11Jun12Dec12Jun13Dec13Jun14
PurchaseOfPPE -247-338-273-397-340-413-427-571-565-510
SaleOfPPE 5214695451655510527
PurchaseOfBusiness -19-297-80-74-2,24136-481-520-692-198
SaleOfBusiness 20302412670000
PurchaseOfInvestment -733-300-370-370-20
SaleOfInvestment 0000000000
NetIntangiblesPurchaseAndSale 0000000000
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities -00032036035-017
Cash Flow from Investing -333-417-284-410-2,561-259-939-1,002-1,153-664
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