Follow the investment over time
The project adds to the example’s existing capital expenditure. Compare Amount with % of Revenue, edit the visible year columns independently and use All forecast years from a row’s value menu for repeated annual investment. The useful life and commissioning convention determine the shared asset schedule; a later commissioning date delays part of the depreciation charge.
Capex now, depreciation later
A cash purchase increases PP&E and appears as an investing outflow. Depreciation subsequently reduces the asset’s book value and operating profit. In this model, the related tax and payout assumptions can also change net income, retained earnings and cash; the before/after display includes those effects. The indirect cash flow adds back the non-cash depreciation charge. See the depreciation and amortization calculator for a dedicated asset schedule.
Cash-funded versus debt-funded investment
Debt funding here means a cash borrowing followed by a cash purchase: both financing inflow and investing outflow appear. A direct non-cash acquisition would require different presentation and is not this example. Explore borrowing, interest and repayment across the statements, or examine capex in free cash flow.
Explain capex in an interview
Separate the purchase from later depreciation. Start with PP&E and investing cash flow, follow depreciation into EBIT and net income, then reconcile retained earnings and ending cash. State the funding and tax assumptions rather than assuming a universal numerical result.
Read the What-If comparison
Buy equipment for cash or using debt adds another purchase. Those existing What-If actions retain their standard five-year, year-end schedule; they do not inherit the project settings above. Additional depreciation is a separate expense transaction, limited by available PP&E. Clearing transactions leaves the project assumptions intact.
Frequently asked questions
Does capex immediately reduce net income?
The asset purchase itself is not an operating expense. Depreciation may begin in the purchase year depending on the selected convention, reducing profit over time.
Where is capex shown on the cash flow statement?
This model shows the cash purchase in investing activities. Debt used to finance it is a separate financing inflow.
How can I model recurring capex?
Choose Amount or % of Revenue in each year column. A value’s All forecast years action copies that value and its method across the table, with a separate asset cohort for each addition.