Our Financial Analysis Success Kit is Ready!
Why you should take a look at the Financial Analysis Success Kit:We've combined all our highly popular financial analysis tools into one mega-financial-analysis-kit that will save you hundreds of dollars if purchased separately. The kit contains 9 files packed with the most important financial ratio analysis tools you can find to help rocket your way to mastering financial analysis. The kit includes:
The eBook "Learn Ratio Analysis In Minutes"
The Learn Financial Ratio Analysis Excel Spreadsheet (2 versions!)
A BONUS...Our eBook of "Key Financial Statement Terms"
Another HUGE BONUS...Five-Part Financial Ratio Cheat Sheet Series
Learn more on our product page:Take a Look
Typically large expense items a company purchases that it will benefit from for more than a year.[sc:kit03 ]
Explanation of Capital Expenditures
Capital Expenditures are sometimes called capital assets, since these purchases are usually items that have long term value to an organization.
Importance of Capital Expenditures
Capital Expenditures as a separate line item on a financial statement are important, as investors in a company are interested in the amount of capital improvements are being made to itself. Investors should be cautious of declining or absent capital expenditures, as well as extraordinarily large values. Explanations as to why these values are what they are should be found in the company’s financial reporting.
Recording valid entries as Capital Expenditures has benefits for the company as well. Depending on the category of asset purchased, the company will record the Depreciation and Amortization of these assets over a number of years.
Capital Expenditures Example
Some example of Capital Expenditures include new production equipment for a manufacturing company, a new commercial HVAC system in an office building, and the purchase of a neighboring warehouse. These are all examples of Capital Expenditures because as these assets have real value, plus are expected to last more than a year.
New assets purchased by a company are not always considered a Capital Expenditure. For example, building maintenance supplies and parts for an entire office building might also have a significant cost, but these supplies do not usually benefit the company for more than a year, and would be expected to record these expenses as maintenance expense.