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  • Are capital expenditures included in EBITDA?

    No, capital expenditures relate to the purchase of physical assets/equipment for the business. The cost is capitalized into PP&E and then depreciated over the useful life of the asset. Since depreciation expenses is added back to net income to calculate EBITDA, then capital expenditures are excluded. However, capital expenditures are included in the investing section […]

  • What is Capex?

    Capex is short for “capital expenditures”. A capital expenditure is when the company purchases physical assets either for cash or on credit (assume liability). Capital expenditures can be classified as either for the purpose of growth or maintenance. For example, if the company needs to replace a machine, then that would be considered maintenance capex. […]

  • How to calculate capital expenditures using a company’s financial statements?

    Under U.S. GAAP, a company is required to include a statement of cash flows. Within the investing section of the statement of cash flows, a company is required to quantify cash outflows from the purchase of equipment, along with cash inflows from the sale of equipment. The cash flow statement is the best way to […]