Which of the following is an example of an investing activities cash flow?

• A. Operating activities: cash receipts from customers.
• B. Investing activities: purchase of PPE.
• C. Financing activities: issuance of debt.
• D. Operating activities: payment of dividends.

Answer: (B)

Investing activities cash flows reflect changes in long-term assets, such as property, plant and equipment, or investments in other entities. Buying property, plant and equipment represents an outflow to acquire a long-term asset for use in operations, which is why it belongs in investing activities. The other options fall into operating or financing categories: cash receipts from customers come from operating activities; issuing debt and paying dividends are financing activities since they relate to obtaining or returning capital. Therefore, the purchase of PPE is the example of an investing activities cash flow.