Capital Expenditure Formula (Examples) | How to Calculate CAPEX?

In this video on Capital Expenditure Formula, here we discuss how to calculate CAPEX along with its formula and practical example.

𝐖𝐡𝐚𝐭 𝐢𝐬 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐄𝐱𝐩𝐞𝐧𝐝𝐢𝐭𝐮𝐫𝐞 (𝐂𝐀𝐏𝐄𝐗) 𝐅𝐨𝐫𝐦𝐮𝐥𝐚?
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Capital Expenditure (Capex) Formula measures the company's overall purchase of assets in the fiscal year and can be easily measured by adding a net increase in the PP&E value during the year to the depreciation cost for that year.

𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐄𝐱𝐩𝐞𝐧𝐝𝐢𝐭𝐮𝐫𝐞 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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CAPEX Formula = Net Increase in PP&E + Depreciation Expense

𝐄𝐱𝐚𝐦𝐩𝐥𝐞 𝐨𝐟 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐄𝐱𝐩𝐞𝐧𝐝𝐢𝐭𝐮𝐫𝐞 (𝐂𝐀𝐏𝐄𝐗) 𝐅𝐨𝐫𝐦𝐮𝐥𝐚
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Let us take the example of a company EFG Ltd and calculate capital expenditure in 2017 based on the following given data -

Depreciation Expense is $20,500 in the income statement
PP&E value at the end of 2017 is $48,500 in the balance sheet
PP&E value at the beginning of 2017 is $42,000 in the balance sheet

Firstly we need to calculate Net increase in PP&E using below formula,

Net increase in PP&E = PP&E value at the end of 2017 – PP&E value at the beginning of 2017

=48500-42000
=6500

Now we will calculate capital expenditure for the year 2017 by using below formula -

Capital Expenditure (capex) Formula = Net increase in PP&E + Depreciation Expense
= 6500+20500
=27000

Therefore, Capital Expenditure incurred during 2017 is $27,000.

To know more about the 𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐄𝐱𝐩𝐞𝐧𝐝𝐢𝐭𝐮𝐫𝐞 (𝐂𝐀𝐏𝐄𝐗) 𝐅𝐨𝐫𝐦𝐮𝐥𝐚 , you can go to this 𝐥𝐢𝐧𝐤 𝐡𝐞𝐫𝐞:-
https://www.wallstreetmojo.com/capital-expenditure-formula-capex/

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Видео Capital Expenditure Formula (Examples) | How to Calculate CAPEX? канала WallStreetMojo