What kind of companies (industries) have negative cash flow from investing activities? And what kind of companies have positive cash flow from investing activities?
Companies from various industries can have either negative or positive cash flow from investing activities, depending on their specific circumstances.
Negative cash flow from investing activities typically arises when companies are spending more on investments than they are receiving. Some industries that commonly experience negative cash flow from investing activities include:
1. Startups and high-growth technology companies: These companies often invest heavily in research and development, infrastructure, equipment, and acquisitions to fuel their growth. The large upfront costs associated with these investments can result in negative cash flow from investing activities.
2. Capital-intensive industries: Companies in industries such as manufacturing, utility, energy, and transportation tend to require significant investment in fixed assets and infrastructure. This can lead to negative cash flow as they incur high capital expenditures.
3. Real Estate: Companies in the real estate industry frequently invest in properties, land acquisitions, and major renovations. These investments often have long payback periods, resulting in negative cash flow from investing activities.
On the other hand, positive cash flow from investing activities generally indicates that a company is generating more cash inflows from its investments than it is spending. Some industries that often have positive cash flow from investing activities include:
1. Financial institutions: Banks, insurance companies, and other financial institutions frequently receive cash from investments such as loans, securities (stocks, bonds), and other financial instruments.
2. Divestment and asset sales: Companies that sell off non-core or underperforming assets, subsidiaries, or divisions can generate positive cash flow from investing activities.
3. Mature and stable industries: Established companies in industries such as consumer goods, healthcare, and utilities may generate positive cash flow from investing activities as they have already made significant investments and are focused on maintaining and optimizing their existing assets.
Please note that these are general examples, and specific companies within an industry can have different cash flow situations based on their business strategies and market conditions. It is important to analyze individual companies' financial statements to understand their cash flow from investing activities in greater detail.