Calculate CapEx from the balance sheet: enter beginning and ending net PP&E and depreciation expense to estimate capital expenditures for the period.
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Capital Expenditure Formula
The following formula can be used to estimate capital expenditure using net PP&E and depreciation, assuming there are no significant PP&E disposals/sales or other non-CapEx adjustments to PP&E during the period.
- Where CapEx is the capital expenditure (estimated)
- Net PP&Ec is the current period net property, plant, & equipment
- Net PP&Ep is the previous period net property, plant, & equipment
- D is the depreciation expense for the period (matching the change between the previous and current PP&E balances)
- This relationship generally will not equal actual CapEx if PP&E is affected by disposals/sales, impairments/write-offs, reclassifications, acquisitions, foreign exchange, or other adjustments.
To estimate capital expenditure using net PP&E, subtract net PP&E from the previous period from net PP&E in the current period, then add depreciation expense for the same period.
Capital Expenditure Definition
Capital expenditure (CapEx) is money a company spends to acquire, improve, or maintain long-lived assets (such as property, plant, and equipment—and sometimes intangible assets) that are expected to provide benefits over more than one year.
Capital Expenditure Example
FAQ
CapEx is short for capital expenditure. It generally refers to money spent to acquire, upgrade, or maintain long-lived assets (such as property, plant, and equipment) that provide benefits over more than one year.
