1. What is Maintenance Capex?

Maintenance Capex (capital expenditure) refers to the funds used by a company to maintain its current level of operations. Unlike growth capex which expands business, maintenance capex simply keeps existing assets productive.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Cost to Maintain Current Operations — The capital required to sustain current production levels

Explanation: This represents the minimum capital expenditure needed to prevent business deterioration.

3. Importance of Maintenance Capex

Details: Understanding maintenance capex helps distinguish between growth and sustaining investments, crucial for financial analysis and valuation.

4. Using the Calculator

Tips: Enter the total cost required to maintain current operations in dollars. This typically includes equipment repairs, replacements, and necessary upgrades.

5. Frequently Asked Questions (FAQ)

Q1: How is maintenance capex different from growth capex?
A: Maintenance capex sustains current operations while growth capex expands capacity or capabilities.

Q2: Where can I find maintenance capex in financial statements?
A: Companies rarely separate it explicitly; analysts often estimate it based on depreciation or management guidance.

Q3: What percentage of revenue is typical for maintenance capex?
A: Varies by industry - capital-intensive businesses may require 2-5% of revenue, while others need much less.

Q4: How often should maintenance capex be reviewed?
A: Annually at minimum, as asset maintenance needs may change with technology and usage patterns.

Q5: Can maintenance capex be deferred?
A: Temporarily yes, but prolonged deferral leads to asset deterioration and higher future costs.