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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.
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'.
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.
A professional investor contemplating a change to the capital structure of a firm (e.g., through a leveraged buyout) first evaluates a firm's fundamental earnings potential (reflected by earnings before interest, taxes, depreciation and amortization and EBIT), and then determines the optimal use of debt versus equity (equity value).
A cost estimate is the approximation of the cost of a program, project, or operation.The cost estimate is the product of the cost estimating process. The cost estimate has a single total value and may have identifiable component values.
Operational due diligence (ODD) is the process by which a potential purchaser reviews the operational aspects of a target company during mergers and acquisitions, private equity investments, or capital raising.
In business, an overhead or overhead expense is an ongoing expense of operating a business. Overheads are the expenditure which cannot be conveniently traced to or identified with any particular revenue unit, unlike operating expenses such as raw material and labor.