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Finance GlossaryCapital Expenditure
Capital Expenditure
Definition of Capital Expenditure
Capital expenditure or CapEx is the amount of money a company spends on maintaining, upgrading, or buying new assets like machinery, equipment, property, and others.
Related Terms
Total Shareholder Return (TSR)
Total Shareholder Return (TSR) measures the overall return generated for investors, combining share price appreciation and dividends received over a period. It provides a more complete view of performance than price returns alone. TSR is commonly used to evaluate long-term value creation and management effectiveness.
Net Asset Value (NAV)
Net Asset Value (NAV) indicates the value of one unit of an investment fund at a given point in time. It reflects the fund’s total assets after expenses, spread across all outstanding units, and helps investors track how the fund’s value changes from day to day.
Consolidated Financial Statements
A consolidated financial statement is a record of all the assets, liabilities, income, expenses, and other financial data of a company and its subsidiaries.
Equities
The term equities can be used to describe two different things. First, equities refers to stocks held by shareholders. Equities of this type represent residual ownership or stake in a company.
Second, equities are the amount of money shareholders shall receive in the event that a company is liquidated. In such a case, the equities will be calculated by subtracting the total debt from total assets.
Mean Reversion
Mean Reversion is a market concept that suggests prices can approach back towards their historical average over time. When a stock trades far above or below its usual level, it is expected to gradually return to the mean.
EBITDA
EBITDA is short for Earnings Before Interest, Taxes, Depreciation, and Amortization. EBITDA allows investors to understand cash flow from all operations while excluding certain non-cash expenses related to interest, depreciation, amortization, and taxes.
That’s why investors use EBITDA as a valuation technique to determine the profitability of a company. Interestingly, EBITDA is a variation of operating income which is known as EBIT.
While there are many ways to calculate EBITDA, the most common methods include:
1) EBITDA = Net Income + Taxes + Interest + Depreciation + Amortization 2) EBITDA = Operating Income + Depreciation & Amortization
That’s why investors use EBITDA as a valuation technique to determine the profitability of a company. Interestingly, EBITDA is a variation of operating income which is known as EBIT.
While there are many ways to calculate EBITDA, the most common methods include:
1) EBITDA = Net Income + Taxes + Interest + Depreciation + Amortization 2) EBITDA = Operating Income + Depreciation & Amortization
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