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CAPEX
(Capital Expenditures)
CAPEX (Capital Expenditures) refers to funds used by a company to acquire, upgrade, or maintain physical assets like property, plants, or equipment. Unlike operational expenses (OPEX), CAPEX investments provide long-term value and are capitalized on the balance sheet.
CAPEX is crucial for growth - Amazon spent $61 billion in 2022 on fulfillment centers and AWS infrastructure. Analysts track CAPEX/sales ratios to assess reinvestment rates (tech firms average 5-10%, utilities 20-30%). CAPEX affects FCF calculations and is a key input in DCF valuations. The IRS allows depreciation of capital assets over their useful lives, providing tax benefits. Smart CAPEX allocation separates thriving companies from stagnant ones.
CAPEX is crucial for growth - Amazon spent $61 billion in 2022 on fulfillment centers and AWS infrastructure. Analysts track CAPEX/sales ratios to assess reinvestment rates (tech firms average 5-10%, utilities 20-30%). CAPEX affects FCF calculations and is a key input in DCF valuations. The IRS allows depreciation of capital assets over their useful lives, providing tax benefits. Smart CAPEX allocation separates thriving companies from stagnant ones.