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Karnivesh
Simplifying finance.... • 2d
Not all capital spending creates growth. Some of it simply keeps a business from slipping backwards. This became clear to me after a conversation where a company proudly announced a large CapEx plan. It sounded impressive, until the question came up: how much of this is maintenance and how much is actually growth? Maintenance CapEx is the cost of staying in place. Machines need replacement, systems need upgrades, plants need repairs. Growth CapEx is different. It’s a choice to expand capacity or enter new markets. Once I started separating the two, business quality looked very different. Mature companies often spend to maintain steady cash flows. Growing companies invest heavily but may not generate free cash flow for years. Now, when I look at CapEx, I focus less on the number and more on its purpose. That distinction quietly changes how you judge cash flows and long-term value. 👉 Read more in the attached link for a deeper breakdown.
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