Intercorporate Investment

Definition of 'Intercorporate Investment'


Securities that are purchased by corporations rather than individual investors. Intercorporate investments allow a company to achieve higher growth rates compared to keeping all of its funds in cash. These investments can also be used for strategic purposes like forming a joint ventures or making acquisitions. Companies purchase securities from other companies, banks and governments in order to take advantage of the returns from these securities. Marketable securities that can readily be exchanged for cash, such as notes and stocks, are usually preferred for this type of investment.

Investopedia explains 'Intercorporate Investment'


Intercorporate investments are accounted for differently than other funds held by a company. Short-term investments that are expected to be turned into cash are considered current assets, while other investments are considered non-current assets. When companies buy intercorporate investments, dividend and interest revenue is reported on the income statement.



comments powered by Disqus
Hot Definitions
  1. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
  2. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by additional investment would not warrant the expense. A harvest strategy is employed when a line of business is considered to be a cash cow, meaning that the brand is mature and is unlikely to grow if more investment is added.
  3. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better.
  4. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  5. Pareto Principle

    A principle, named after economist Vilfredo Pareto, that specifies an unequal relationship between inputs and outputs. The principle states that, for many phenomena, 20% of invested input is responsible for 80% of the results obtained. Put another way, 80% of consequences stem from 20% of the causes.
  6. Budget Deficit

    A status of financial health in which expenditures exceed revenue. The term "budget deficit" is most commonly used to refer to government spending rather than business or individual spending. When referring to accrued federal government deficits, the term "national debt” is used.
Trading Center