1. What is Capex?

Capital expenditures (Capex) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. It's often used to undertake new projects or investments by the company.

2. How Does the Capex Formula Work?

The calculator uses the Capex formula:

Where:

• \( Ending\ PP\&E \) — Property, plant, and equipment at end of period
• \( Beginning\ PP\&E \) — Property, plant, and equipment at start of period
• \( Depreciation \) — Depreciation expense during the period

Explanation: The formula calculates capital expenditures by accounting for changes in PP&E while adjusting for depreciation that would otherwise reduce the apparent amount spent.

3. Importance of Capex Calculation

Details: Capex is a crucial metric for investors and analysts as it shows how much a company is investing in future growth. High Capex may indicate expansion, while low Capex might suggest maintenance mode.

4. Using the Calculator

Tips: Enter all values in the same currency. Values should be from the same accounting period. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between Capex and Opex?
A: Capex refers to capital expenditures (long-term investments), while Opex (operating expenses) are day-to-day expenses required to run the business.

Q2: How often should Capex be calculated?
A: Typically calculated quarterly and annually as part of financial reporting, but can be calculated for any period.

Q3: Where can I find PP&E and Depreciation values?
A: These are found on the balance sheet (PP&E) and income statement (Depreciation) of a company's financial reports.

Q4: Can Capex be negative?
A: Yes, if a company sells more property/equipment than it purchases, but this is unusual for growing companies.

Q5: How does Capex affect cash flow?
A: Capex appears as an outflow in the investing activities section of the cash flow statement.