Switch to:
GuruFocus has detected 5 Warning Signs with Dow Chemical Co $DOW.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Dow Chemical Co (NYSE:DOW)
Cash Flow from Investing
$-3,479 Mil (TTM As of Dec. 2016)

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 Dec. 2016, Dow Chemical Co spent $927 Mil on purchasing property, plant, equipment. It gained $67 Mil from selling property, plant, and equipment. It spent $0 Mil on purchasing business. It gained $0 Mil from selling business. It spent $372 Mil on purchasing investments. It gained $126 Mil from selling investments. It paid $0 Mil for net Intangibles purchase and sale. It paid $0 Mil for discontinued investing activities. And it received $125 Mil from other investing activities. In all, Dow Chemical Co spent $981 Mil on investment activities in financial market and operating subsidiaries for the three months ended in Dec. 2016.


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.

Dow Chemical Co's Cash Flow from Investing for the fiscal year that ended in Dec. 2016 is calculated as:

Dow Chemical Co's Cash Flow from Investing for the quarter that ended in Dec. 2016 is calculated as:

Dow Chemical Co Cash Flow from Investing for the trailing twelve months (TTM) ended in Dec. 2016 was -1163 (Mar. 2016 ) + -900 (Jun. 2016 ) + -435 (Sep. 2016 ) + -981 (Dec. 2016 ) = $-3,479 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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.

Dow Chemical Co's purchase of property, plant, equipment for the three months ended in Dec. 2016 was $-927 Mil. It means Dow Chemical Co spent $927 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.

Dow Chemical Co's sale of property, plant, equipment for the three months ended in Dec. 2016 was $67 Mil. It means Dow Chemical Co gained $67 Mil from selling property, plant, and equipment.

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

Dow Chemical Co's purchase of business for the three months ended in Dec. 2016 was $0 Mil. It means Dow Chemical Co spent $0 Mil on purchasing business.

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

Dow Chemical Co's sale of business for the three months ended in Dec. 2016 was $0 Mil. It means Dow Chemical Co gained $0 Mil from selling business.

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

Dow Chemical Co's purchase of investment for the three months ended in Dec. 2016 was $-372 Mil. It means Dow Chemical Co spent $372 Mil on purchasing investments.

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

Dow Chemical Co's sale of investment for the three months ended in Dec. 2016 was $126 Mil. It means Dow Chemical Co gained $126 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.

Dow Chemical Co's net Intangibles purchase and sale for the three months ended in Dec. 2016 was $0 Mil. It means Dow Chemical Co 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.

Dow Chemical Co's cash from discontinued investing activities for the three months ended in Dec. 2016 was $0 Mil. It means Dow Chemical Co 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.

Dow Chemical Co's cash from other investing activities for the three months ended in Dec. 2016 was $125 Mil. It means Dow Chemical Co received $125 Mil from 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 local exchange's currency.

Dow Chemical Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
PurchaseOfPPE -30-63-713-45-143-2,614-2,302-3,572-123-187
SaleOfPPE 2112522941,877006601192,383284
PurchaseOfBusiness -221-667-15,202-8-8-39-21-500
SaleOfBusiness 9362,985187560081,52822
PurchaseOfInvestment -2,819-855-580-1,268-1,263-794-599-913-2,049-1,710
SaleOfInvestment 1,9838006841,057967553705767640733
NetIntangiblesPurchaseAndSale 0000000000
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities -2,075-2,210-2,235-1,665-1,60320788491-3,729-2,621
Cash Flow from Investing -2,858-2,737-14,767135-1,994-2,687-1,469-3,105-1,350-3,479

Dow Chemical Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
PurchaseOfPPE -930-1,106-903-1,052-8-61-820-1,22137-927
SaleOfPPE 001,37596708204321454067
PurchaseOfBusiness 00-79000-167000
SaleOfBusiness 0000000000
PurchaseOfInvestment -114-399-208-352-323-1,166-366-504-468-372
SaleOfInvestment 14722313410499303155273179126
NetIntangiblesPurchaseAndSale 0000000000
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities 466761122-9546103407-223125
Cash Flow from Investing -431-1,206320-1,082-478-110-1,163-900-435-981
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK