An amount shown in parenthesis within the investing activities section of the cash flow statement indicates that cash was used to purchase a long-term asset. For example, if a company spent $350,000 to purchase property, plant and equipment, it will be reported in the cash flows from investing activities as Capital expenditures….(350,000).
The amounts appearing in parenthesis can be thought of as indicating the following:
- cash flowed out
- cash was reduced
- cash was used
- it was not good for the cash balance
Positive amounts, which are the amounts not in parenthesis, indicate:
- cash flowed in
- cash was increased
- cash was provided
- it was good for the cash balance
The amounts received from the sale of long-term assets will be shown without parenthesis. For example, if the company sells some of the equipment it had used in the business, the amount received will appear as a positive amount.
