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Under the U.S. tax code, businesses expenditures can be deducted from the total taxable income when filing income taxes if a taxpayer can show the funds were used for business-related activities, [1] not personal [2] or capital expenses (i.e., long-term, tangible assets, such as property). [3]
Capital expenditures are the funds used to acquire or upgrade a company's fixed assets, such as expenditures towards property, plant, or equipment (PP&E). [3] In the case when a capital expenditure constitutes a major financial decision for a company, the expenditure must be formalized at an annual shareholders meeting or a special meeting of the Board of Directors.
An operating expense (opex) [a] is an ongoing cost for running a product, business, or system. [1] Its counterpart, a capital expenditure (capex), is the cost of developing or providing non-consumable parts for the product or system.
Therefore, this input to the calculation of free cash flow may be subject to manipulation, or require estimation. Since it may be a large number, maintenance capex's uncertainty is the basis for some people's dismissal of 'free cash flow'. A second problem with the maintenance capex measurement is its intrinsic 'lumpiness'.
Return on capital (ROC), or return on invested capital (ROIC), is a ratio used in finance, valuation and accounting, as a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders. [1]
Valuation using discounted cash flows (DCF valuation) is a method of estimating the current value of a company based on projected future cash flows adjusted for the time value of money. [1]
In finance, the operating ratio is a company's operating expenses as a percentage of revenue.This financial ratio is most commonly used for industries which require a large percentage of revenues to maintain operations, such as railroads. [1]
Capex Corporation was an American computer software company in existence from 1969 through 1982 and based in Phoenix, Arizona. It made a variety of software products, mostly system utilities for the IBM mainframe platform, [ 1 ] and was known for its Optimizer add-on to the IBM COBOL compiler .