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Acquisitions, net of cash acquired

Why the investing outflow for a deal is the purchase price minus the target's cash, with Microsoft's and Walmart's cash flow statements.

The short answer

When a company buys another business, the cash flow statement usually reports the purchase as an investing outflow net of the cash that came with the target. If you pay $100 and the acquired company holds $10 of cash, the line is an $90 outflow, because the $10 is already cash in the combined group after the deal.

Why the line is net

The group's beginning cash does not include the target. After the closing, the target's cash is part of the group's cash. The cash flow statement treats the cash obtained as a reduction of the purchase outflow, so the investing line is the cash paid for the shares or assets, minus the cash acquired (and, in some presentations, plus or minus cash from divestitures in the same line). That presentation is why the line often reads "acquisitions, net of cash acquired" rather than "purchase price." The full purchase price, including shares issued or debt assumed, belongs in the acquisition note and in any business combinations disclosure, not necessarily in this one cash line.

How two 10-Ks label it

Microsoft's cash flow statement for fiscal 2026 has an investing line titled "Acquisition of companies, net of cash acquired and divestitures, and purchases of intangible and other assets." The label is broader than a single deal: it also includes divestitures and purchases of intangibles. Walmart's 10-K for fiscal 2026 uses a tighter heading: "Payments for business acquisitions, net of cash acquired." In both cases, the investing section is where you look, and the words "net of cash acquired" tell you the figure is not the headline purchase price on its own.

Source: Microsoft 10-K for fiscal 2026, filed Jul 29, 2026 · Walmart 10-K for fiscal 2026, filed Mar 13, 2026

What the line leaves out

Noncash consideration. Shares issued to the seller do not appear as an investing cash outflow. They are often listed in the noncash supplemental disclosures or in the acquisition note.
Debt assumed increases liabilities. It is part of how the deal was financed, but it is not, by itself, a cash outflow at closing.
A combined line can mix deals, divestitures and asset purchases. Microsoft's heading includes divestitures and purchases of intangible and other assets. The note is the place to separate those pieces when you need to.

Common questions

What does 'net of cash acquired' mean?

The investing outflow is the cash paid for the business minus the cash the acquired company already held. That cash becomes part of the buyer's cash after the closing.

Where is the line?

In the investing section of the cash flow statement. Walmart labels it 'Payments for business acquisitions, net of cash acquired.' Microsoft's heading also includes divestitures and purchases of intangibles.

Why isn't this the full purchase price?

Because cash acquired is subtracted, and because part of the price may be paid in stock or by assuming debt, which are not cash outflows in the same line.

Where is the full deal described?

In the business-combinations or acquisitions note, which typically has the purchase price, the assets acquired (including cash), and goodwill.

Do divestitures sit in the same line?

Sometimes. Microsoft's heading includes divestitures in the same investing line. Other companies show proceeds from divestitures separately.

Disclosures

Editor holdings: The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation: Nobody paid for this page. No affiliate links on this page.
Sources: Each company's own SEC filings, linked next to each number.
Last updated: Nov 10, 2026

General education, the same for every reader. Not a recommendation to buy, sell or hold any security, and it doesn't consider your situation.

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