Why is separate disclosure of cash flows from investing activities important?

To show the impact of investing decisions on future income

The separate disclosure of cash flows from investing activities in a cash flow statement is important primarily because it allows stakeholders to understand and assess the impact of investing decisions on the future income and financial position of a company. This information provides valuable insights into the ways in which the company is allocating its resources to acquire or dispose of long-term assets and investments that are intended to generate future income and cash flows. By categorizing investing activities separately, stakeholders can evaluate the company's capital expenditures, acquisitions, and divestitures that contribute to its growth and strategic direction. It helps answer questions such as how much the company is investing in its operations, what assets are being acquired or sold, and how these actions may affect the company's ability to generate future earnings.