CAPEX Distribution Model 1
Originally published: 24/08/2020 09:03
Publication number: ELQ-91385-1
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CAPEX Distribution Model 1

It distributes Total Project Cost per Project as per Project Duration by comparing to the project starting date, identif

Description
Generally, Capital expenditures refer to funds that are used by a company for the purchase, improvement, or maintenance of long-term assets to improve the efficiency or capacity of the company. Long-term assets are usually physical, fixed and non-consumable assets such as property, equipment, or infrastructure, and that have a useful life of more than one accounting period.

Also known as CapEx or capital expenses, capital expenditures include the purchase of items such as new equipment, machinery, land, plant, buildings or warehouses, furniture and fixtures, business vehicles, software, or intangible assets such as a patent or license.

The expenditure amounts for an accounting period are usually stated in the cash flow statement. Capital expenditures normally have a substantial effect on the short-term and long-term financial standing of an organization. Therefore, making wise CapEx decisions is of critical importance to the financial health of a company. Many companies usually try to maintain the levels of their historical capital expenditure to show investors that the managers of the company are investing effectively in the business.

This models allows you to break it into accurate timeline, considering payment patterns of any similar project ended in recent times.

Mentioned below is the methodolgy on which overall model is based:
It distributes Total Project Cost per Project as per Project Duration by comparing to the project starting date, identifying the period required to complete the project and distributing the total remained cost to the period based on pending percentage of completion per project.

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Further information

To accurately define budget for CAPEX with breaking it out accurately to the timelines defined.

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