Nicolas Boucher

@BoucherNicolas

8 Tweets • 2023-10-06 •  See on

rattibha.com 

What is CAPEX?

Read all about it below

Definition and Explanation

CAPEX, short for "capital expenditures," refers to the

funds a company invests in acquiring, upgrading, or
maintaining long-term assets, such as buildings,
equipment, or infrastructure.

These expenditures are vital for business growth,

innovation, and maintaining operational efficiency.

Where is it used?

CAPEX is utilized to enhance a company's

capabilities, expand production capacities, or improve
overall efficiency.

It is a critical component of strategic planning and

investment decisions.
Benefits

- Facilitates business expansion and growth.

- Enhances operational efficiency and
competitiveness.

Drawbacks

- High CAPEX can strain short-term liquidity.

- Incorrect estimation may lead to financial challenges.

Example

A manufacturing company invests in new machinery to

increase production capacity, leading to improved
efficiency and higher output.

How can you use it

- Evaluate the potential return on investment.

- Assess the impact on cash flow and profitability.
- Plan for financing options to cover CAPEX.
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