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Capital expenditure ratio

Capital expenditure ratio

Description

Capital expenditure ratio exposes proportion between the money from operating cash flow and the money used for capital expenditures. This ratio shows whether a company earns more from its’ main activities or spends more to maintain or expand these activities. Data needed to calculate this ratio is collected from balance sheet and cash flow statement.

Norms and limitation

There are no norms and limitations for this ratio.

While evaluating the value of this ratio one must pay attention to the industry a company is operating in. Different industries have different demands for capital expenditures.

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