How do I calculate the capital expenditure budget?
To calculate the capital expenditure budget, use the following formula:
Total Capital Expenditures = Total Assets - (Current Assets + Long Term Liabilities)
This formula can be used to calculate the capital expenditure budget using an income statement and balance sheet. For convenience, the calculation can be done using software such as Sourcetable.
What is a Capital Expenditure?
A capital expenditure (CAPEX) is an expense a company makes to maintain and grow its business over a period of years. Examples of capital expenditures include purchasing assets such as buildings, machinery, or equipment, or investing in research and development.
What are the benefits of investing in Capital Expenditures?
Investing in capital expenditures can help improve the efficiency of a firm by providing capital for investments in new technology, resources, and infrastructure. This can lead to increased productivity, improved customer service, and cost savings.