How to Derive Capital Expenditure
Capital expenditure is a measure of how much a company spends in order to maintain, run and expand a company. If you have a company's balance sheets, then the calculation is relatively easy since it only requires figures for total assets and total liabilities. Capital expenditure, often abbreviated to CAPEX, measures a company's change in assets and liabilities on a quarterly or annual basis.
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Instructions
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Obtain financial statements from the company you wish to assess. You will need the latest financial statement in addition to one released one year ago. The ease of this step largely depends on the type of company since it is much easier to obtain financial statements from publicly listed companies than from privately-owned ones. This is because publicly-held companies have an obligation to publish their financial information to stockholders whereas privately-held companies do not have such a legal obligation.
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Calculate the change in total assets. Total assets are defined as everything the company owns as well as everything that is owed to it and may be found in the balance sheet section of a financial statement. Subtract last year's total assets from this year's total assets to obtain the change in total assets. So, if last year's total assets were $1,000,000 and this year's total assets are $1,200,000, then the change in total assets would be $200,000.
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Calculate the change in total liabilities, the data for which is also available from the balance sheet section of a financial statement. Total liabilities represent everything the company owes. So, if last year's total liabilities were $600,000 and this year's total liabilities equal $700,000, then the change in total liabilities would be $100,000.
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Subtract the change in total liabilities from the change in total assets to derive CAPEX. Using the same example, subtracting $100,000 from $200,000 gives a CAPEX of $100,000.
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