Investing cash flow and financing cash flow

Investing cash flow (or CFI) is usually the 2nd portion of the cash flow statement and it measures the money that the firm use for its investment activities. The most important no. here is the capex no. Capex is also known as capital expenditure which what the firm needs to invest in (usually in new equipment, new technology or new offices etc) in order to stay competitive in its business.

This no. however is not labelled as "Capex" in the cash flow statement but usually goes by some obsure label like "Acquisition of New Property, Plant and Equipment". Why is this so? One good reason that I can think of is because auditors love to make life difficult for a lot of people and sell-side analysts, investor relations managers get to keep their jobs by having to explain what "Acquisition of New Property, Plant and Equipment" really is.

Other no.s that goes into investing cash flow will include:
1) Sale of Property, Plant and Equipment (opposite of capex)
2) Purchase and Sale of Investment Securities
3) Acquisition of new subsidiaries or associated companies etc

Financing cash flow (or CFI) is usually the last portion in the cash flow statement and it deals with the financing needs (both equity and debt) of the company. This would usually involve repayment of debt, or increase in borrowing, dividend payment, capital reduction or increase in equity etc. It would be useful to observe how the company is changing its capital structure from this part of the statement. In Singapore, a lot of companies are trying to reduce its equity base (SPH, Singpost etc) in order to make some financial ratios (like ROE) look good and also to return money back to their No.1 shareholder: Temasek Holdings. Of course, minority shareholders will stand to benefit as well, hence while it last, it would not be a bad idea to invest in these stocks.