If you have capex, you do not record that expense on that income that year.
You instead, deduct it slowly over it's useful life (ex: do not expense this year, but may deduct 10% of its value over 10 years)
Lets say I look at a company's EBITDA over 10 years. That means, at no point, is that company's capex ever recorded, right?
| +186 | Piper Sandler in talks to acquire PWP | 75 | 1d |
| +101 | Paradise Is Paradise | 8 | 1d |
| +80 | Drunk VP. How to manage? | 27 | 2d |
| +40 | How do I take my foot off the gas? (AN1) | 4 | 2d |
| +38 | Lazard US Views 2026/2027 | 13 | 2d |
| +26 | Why did EVR succeed vs GHL or PWP that ended up getting acquired? | 9 | 1d |
| +22 | Mandated 9:00am Arrival? | 6 | 5d |
| +21 | Prestige Upgrade: Incoming Piper Sandler Intern (PWP Merger) | 4 | 6d |
| +21 | How early is to early? | 9 | 19h |
| +21 | Why Do We Turn Comments? | 2 | 6h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Capex is not an operating expense
Correct. CapEx doesn't appear in the income statement anywhere. Depreciation is a proxy for it, but that's not in EBITDA obviously ("before...depreciation...").
So basically after 10 years, looking at EBITA, a capex-heavy company's capex expenses (depreciation) would be ignored.
So is EBIT better for looking at capex heavy businesses?
I'm not following you, and don't understand your fixation with 10 years.
EBITDA-capex (vs. ebita) is a better cashflow metric for capital intensive companies, especially if that's "maintenance" vs. "growth" capex.
Thanks for the help. Just wanted to really clarify that point still.
Year doesn't matter, was just picking an arbitrary number.
I just want to make sure I understand - that if you look at a company's EBITDA any effect of capex is null, right? Since depreciation is the expense account for capex. EBITDA takes no capex (i.e depreciation) into account at all.
So a capex intensive business with have a much seemingly higher profitability than if EBIT was used.
Consequuntur et eius sit. Et atque earum labore ut. Laboriosam velit sed repudiandae necessitatibus nobis saepe odio. Officia accusantium aliquam eos temporibus provident nesciunt et qui. Ad ab qui soluta consequatur reprehenderit tempora.
Tenetur temporibus asperiores dolor sit aut vel ratione consequatur. Fugiat dicta sit quisquam debitis soluta. Omnis dolores ab aut aliquid et id fugit. Numquam quia rerum vel tenetur fuga deleniti velit.
Dicta voluptas ab ab qui. Id harum soluta ea facere natus sed. Quo nemo ad est culpa autem nihil.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...