Definition
A CapEx budget is a plan for capital spending on long-lived assets over a period, split into maintenance and growth projects.
Formula
CapEx budget = maintenance CapEx + growth CapEx
Example
If maintenance CapEx is $300k and growth CapEx is $500k, the annual budget is $800k.
How to use it
- Review expected ROI and payback before approving growth projects.
- Match CapEx timing to cash flow seasonality to protect runway.
Common mistakes
- Treating all CapEx as discretionary and delaying required maintenance.
- Approving projects without a post-investment review plan.
Why this matters
This term matters because cash timing and risk are usually the difference between a plan that works on paper and a plan that survives. Use consistent definitions so decisions are comparable over time.
Practical checklist
- Write a 1-line definition for "CapEx Budget" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Sanity-check with a related calculator from the same category on MetricKit.
- Read the related guide (e.g., Investment decision metrics: NPV vs IRR vs payback vs PI) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- Break-even Pricing Calculator: Compute contribution margin, break-even units, and profit at a given volume based on price and variable costs.
- DCF Valuation Calculator: Estimate enterprise value using a simple DCF: forecast cash flows, apply a discount rate (often WACC), and add a terminal value.
- Investment Decision Calculator: Evaluate an investment using NPV, IRR, discounted payback, and profitability index from simple cash flow assumptions.
- Profitability Index Calculator: Calculate profitability index (PI) from discounted cash flows and estimate the max investment for a target PI.
- WACC Calculator: Calculate WACC (Weighted Average Cost of Capital) from capital structure, cost of equity, cost of debt, and tax rate.
Guides
- Investment decision metrics: NPV vs IRR vs payback vs PI: A practical guide to investment decision metrics: when to use NPV, when IRR misleads, and how payback and profitability index fit in.
- Capital budgeting hub: NPV, IRR, payback, and investment decisions: A practical hub for capital budgeting: use NPV, IRR, discounted payback, and profitability index together (and avoid relying on a single metric).