Equity · Core
Capital Expenditure
Capital expenditure is cash spent to buy or extend long-lived assets — the investing outflow that depreciation later shadows.
Definition
Capex is CFI cash for PP&E and some capitalized software. Maintenance capex keeps the machine running; growth capex expands it. The split is a judgment, which is why every management team has a generous one.
Why it matters
FCF, leverage capacity, and ‘asset-light’ stories all turn on capex. Understating maintenance capex inflates owner earnings.
Case
A miner cuts sustaining capex to hit FCF guidance into a dividend year. Two years later volumes slip and sustaining jumps. The dividend was borrowed from the pit.
How to read it
Read capex vs D&A, vs growth in volumes, and vs the stated maintenance number. Footnotes beat the slide.
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