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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.
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]
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.
Flowchart for a typical DCF valuation, with each step detailed in the text (click on image to see at full size) Spreadsheet valuation, using free cash flows to estimate the stock's fair value, and displaying sensitivity to WACC and perpetuity growth (click on image to see at full size)
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'.
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Abandonment costs or Abandonment expenditure (ABEX) are costs associated with the abandonment of a business venture.. Abandonment costs traditionally applied to the process of abandoning an under-producing or non-producing oil or gas well.
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 .