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. This is often used to undertake new projects or investments by the company.

2. How Does the Calculator Work?

The calculator uses the following 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 for the period

Explanation: This formula calculates capital expenditures by adjusting the change in PP&E for the depreciation that occurred during the period.

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 maintaining and growing its business. High capex may indicate growth investments, while low capex might suggest underinvestment or maturity.

4. Using the Calculator

Tips: Enter all values in the same currency unit. The values should be from consecutive periods (e.g., year 2023 and 2022). Ensure all values are positive numbers.

5. Frequently Asked Questions (FAQ)

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

Q2: Why add back depreciation in the formula?
A: Depreciation reduces PP&E on the balance sheet, so we add it back to isolate the actual capital expenditures made during the period.

Q3: Where can I find these numbers in financial statements?
A: PP&E is on the balance sheet, depreciation is on the income statement (often in operating expenses or as a separate line item).

Q4: What if a company sold assets during the period?
A: This formula assumes no asset sales. If significant assets were sold, the calculation may need adjustment for disposals.

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