# Investing Cashflow

This article explains how **Investing cashflows** work in Model Reef.

You will learn:

* What counts as Investing cashflow.
* How capex and asset related cash movements are represented.
* How Investing cashflows link to Assets, depreciation and valuation.

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Investing cashflows show how the business allocates cash into longer-term assets. They are primarily driven by Asset variables and their timing settings in Model Reef.
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### Components of Investing cashflow

In Model Reef, Investing cashflows usually include:

* **Capex**
  * Cash outflows for physical or intangible Assets.
  * Plant, equipment, property, fit outs, vehicles, software, development costs.
* **Other asset movements**
  * Any additional long term investments represented via Asset variables.

These are derived from Asset variables and their timing settings.
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### Link to Assets and depreciation

When you add capex via an Asset variable:

* The **Balance Sheet** records an increase in Assets.
* The **Cashflow Statement** records a capex outflow in Investing cashflows.
* The **P\&L** records non cash depreciation over the useful life of the asset.

Depreciation and amortisation do not appear in Investing cashflows. They are non-cash and appear in the P\&L below EBITDA.
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### Investing cashflow and free cashflow

Investing cashflows are a key component of free cashflow calculations:

* Free cashflow to the firm adjusts EBITDA and working capital, then subtracts capex.
* Heavy investment periods will reduce free cashflow even if operating performance is strong.
* Low or negative capex can temporarily boost free cashflow at the cost of underinvestment.

Model Reef's valuation engine uses both Operating and Investing cashflows when computing FCFF and FCFE.
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### Analysing Investing cashflow

You can analyse Investing cashflow by:

* Looking at the level and timing of capex relative to revenue or capacity.
* Splitting capex by branch or project using Asset variables in different branches.
* Comparing capex across scenarios to test growth and maintenance strategies.
* Examining how different capex profiles affect free cashflows and valuation.

This helps in planning expansion, maintenance and financing.
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***

## Related articles

* [Staffing Rosters for Events](/use-cases/hospitality-and-events-functions-events-venues/staffing-rosters-for-events.md)
* [Build a Relative Valuation Using Fundamentals](/how-tos/valuation/build-a-relative-valuation-using-fundamentals.md)
* [Operating Cashflow](/help/financial-outputs-and-valuation/operating-cashflow.md)
* [Economic Driver Fields](/syntax/drivers-syntax/economic-driver-fields.md)


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