Module I· PP&E, Capex & D&ABasic
Question
What is capex, and how does it differ from opex?
Answer
| Capex | Opex | |
|---|---|---|
| Useful life | >1 year | immediate |
| Examples | Machinery, buildings, IT hardware | Staff, materials, rent |
| Balance sheet | capitalized as PP&E | not capitalized |
| Income statement | spread via D&A | hits immediately |
Example
Machine 100, 10-year useful life → capex 100 (balance sheet), D&A 10/yr (income statement).
IB modeling
Model capex separately from opex (capex via % of sales or absolute, opex via margin structure).
Pitch tip
Capex intensity = capex/sales. Industrials 5-10%, tech 2-5%, telco/utilities 15-25%.