1. What is Capex?

Capital expenditures (Capex) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, or equipment. This calculation method helps determine Capex based on changes in net book value and depreciation.

2. How Does the Capex Formula Work?

The calculator uses the following formula:

Where:

• Ending NBV — Net book value at the end of the period (currency)
• Beginning NBV — Net book value at the start of the period (currency)
• Depreciation — Depreciation expense for the period (currency)

Explanation: The formula accounts for changes in asset values while adjusting for depreciation that would otherwise reduce the apparent capital investment.

3. Importance of Capex Calculation

Details: Accurate Capex calculation is crucial for financial analysis, cash flow management, and understanding a company's investment in its future growth and maintenance of existing assets.

4. Using the Calculator

Tips: Enter all values in the same currency unit. Ensure the time periods for beginning and ending NBV match the depreciation period. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate Capex this way?
A: This method provides a quick way to estimate capital expenditures when you have balance sheet information but not direct Capex figures.

Q2: What's the difference between Capex and OpEx?
A: Capex refers to capital expenditures for long-term assets, while OpEx (operating expenses) are short-term expenses for daily operations.

Q3: How does depreciation affect Capex?
A: Depreciation reduces net book value, so we add it back to get the true capital expenditure amount.

Q4: Can this formula be used for individual assets?
A: Yes, you can apply it to individual assets or entire asset categories, as long as you have the NBV and depreciation figures.

Q5: What if the result is negative?
A: A negative result could indicate asset sales or disposals exceeding new capital investments during the period.