Module VI· Capex & Depreciation ScheduleIntermediate
Question

How do you model capex as percentage of sales versus hardcode?

Answer

Capex as percentage of sales ties investment to business growth and is useful for steady-state forecasts. Hardcoded capex is better for known projects, capacity expansions, or management budgets. A good model often uses hardcoded near-term project capex and percentage-of-sales long-term maintenance / normalized capex.