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If you have access to a company’s cash flow statement, then no calculation is necessary and you can simply see the capital expenditures that were made in the investing cash flow section.
If you don’t have access to the cash flow statement, it’s possible to calculate the net capital expenditure if depreciation is broken out on the income statement (which most, but not all, companies do).
To calculate capital expenditures, follow these steps:
This formula is derived from the logic that the current period PP&E on the balance sheet is equal to prior period PP&E plus capital expenditures less depreciation.
Important Note: This formula will produce a “net” capital expenditure number, meaning if there are any dispositions of PP&E in the period, they will lower the value of CapEx that is calculated with the formula. To adjust for this, you will be required to read the notes to the financial statements. Learn more in CFI’s Financial Analysis Courses.
Example of the CapEx calculation in Excel
Here is an example of how to calculate capital expenditures, as it applies to financial modeling in Excel:
This CapEx formula can be useful in financial modeling, particularly when working with a company that has complicated financial statements and a lot of detail that goes into their capital asset schedules.
As the below example shows, a net capital expenditures figure can be built to complete the model until more detailed information is provided.
Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.
A well rounded financial analyst possesses all of the above skills!
Additional Questions & Answers
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.
In order to become a great financial analyst, here are some more questions and answers for you to discover:
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