Intercorporate Investment

AAA

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.

RELATED TERMS
  1. Common Stock

    A security that represents ownership in a corporation. Holders ...
  2. Joint Venture - JV

    A business arrangement in which two or more parties agree to ...
  3. Bond

    A debt investment in which an investor loans money to an entity ...
  4. Liquid Asset

    An asset that can be converted into cash quickly and with minimal ...
  5. Marketable Security

    Any equity or debt instrument that it readily salable and can ...
  6. Non-Marketable Security

    Any type of security that is difficult to buy or sell because ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. What Are Corporate Actions?
    Bonds & Fixed Income

    What Are Corporate Actions?

  3. Mergers & Acquisitions: An Avenue For ...
    Forex Education

    Mergers & Acquisitions: An Avenue For ...

  4. How The Big Boys Buy
    Retirement

    How The Big Boys Buy

Hot Definitions
  1. Return On Sales - ROS

    A ratio widely used to evaluate a company's operational efficiency. ROS is also known as a firm's "operating profit margin". ...
  2. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  3. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  4. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  5. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  6. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
Trading Center