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GuruFocus has detected 2 Warning Signs with Petroleo Brasileiro SA Petrobras $PBR.
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Petroleo Brasileiro SA Petrobras (NYSE:PBR)
Cash Flow from Investing
$-10,216 Mil (TTM As of Mar. 2017)

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 Mar. 2017, Petroleo Brasileiro SA Petrobras spent $3,187 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 $11 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 received $572 Mil from other investing activities. In all, Petroleo Brasileiro SA Petrobras spent $2,626 Mil on investment activities in financial market and operating subsidiaries for the three months ended in Mar. 2017.


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.

Petroleo Brasileiro SA Petrobras's Cash Flow from Investing for the fiscal year that ended in Dec. 2016 is calculated as:

Petroleo Brasileiro SA Petrobras's Cash Flow from Investing for the quarter that ended in Mar. 2017 is calculated as:

Petroleo Brasileiro SA Petrobras Cash Flow from Investing for the trailing twelve months (TTM) ended in Mar. 2017 was -3066 (Jun. 2016 ) + -2430 (Sep. 2016 ) + -2094 (Dec. 2016 ) + -2626 (Mar. 2017 ) = $-10,216 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.

Petroleo Brasileiro SA Petrobras's purchase of property, plant, equipment for the three months ended in Mar. 2017 was $-3,187 Mil. It means Petroleo Brasileiro SA Petrobras spent $3,187 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.

Petroleo Brasileiro SA Petrobras's sale of property, plant, equipment for the three months ended in Mar. 2017 was $0 Mil. It means Petroleo Brasileiro SA Petrobras gained $0 Mil from selling property, plant, and equipment.

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

Petroleo Brasileiro SA Petrobras's purchase of business for the three months ended in Mar. 2017 was $0 Mil. It means Petroleo Brasileiro SA Petrobras spent $0 Mil on purchasing business.

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

Petroleo Brasileiro SA Petrobras's sale of business for the three months ended in Mar. 2017 was $0 Mil. It means Petroleo Brasileiro SA Petrobras gained $0 Mil from selling business.

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

Petroleo Brasileiro SA Petrobras's purchase of investment for the three months ended in Mar. 2017 was $-11 Mil. It means Petroleo Brasileiro SA Petrobras spent $11 Mil on purchasing investments.

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

Petroleo Brasileiro SA Petrobras's sale of investment for the three months ended in Mar. 2017 was $0 Mil. It means Petroleo Brasileiro SA Petrobras 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.

Petroleo Brasileiro SA Petrobras's net Intangibles purchase and sale for the three months ended in Mar. 2017 was $0 Mil. It means Petroleo Brasileiro SA Petrobras 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.

Petroleo Brasileiro SA Petrobras's cash from discontinued investing activities for the three months ended in Mar. 2017 was $0 Mil. It means Petroleo Brasileiro SA Petrobras 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.

Petroleo Brasileiro SA Petrobras's cash from other investing activities for the three months ended in Mar. 2017 was $572 Mil. It means Petroleo Brasileiro SA Petrobras received $572 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.

Petroleo Brasileiro SA Petrobras Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
PurchaseOfPPE -20,978-29,874-31,007-45,078-37,024-40,802-45,110-34,808-21,653-14,085
SaleOfPPE 0000000000
PurchaseOfBusiness 0000000000
SaleOfBusiness 00000003,7442242,205
PurchaseOfInvestment -1,7070-4,377-60,177-336-146-199-329-1080
SaleOfInvestment 00006,68305,718000
NetIntangiblesPurchaseAndSale 0000000000
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities -1,34140822845,304-3,9422,5693,966-5,0828,241577
Cash Flow from Investing -24,026-29,466-35,156-59,951-34,619-38,379-35,625-36,475-13,296-11,303

Petroleo Brasileiro SA Petrobras Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
PurchaseOfPPE -8,334-6,115-5,716-5,084-4,738-3,753-3,375-3,139-3,818-3,187
SaleOfPPE 0000000000
PurchaseOfBusiness 0000000000
SaleOfBusiness 0000000000
PurchaseOfInvestment 00000-69-14-370-11
SaleOfInvestment 0000000000
NetIntangiblesPurchaseAndSale 0000000000
CashFromDiscontinuedInvestingActivities 0000000000
CashFromOtherInvestingActivities 1,956-1,3357,4261,8244421093237461,724572
Cash Flow from Investing -6,378-7,4501,710-3,260-4,296-3,713-3,066-2,430-2,094-2,626
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