Capex Growth vs Maintenance Calculator
Growth vs maintenance capex.
Split total capex into growth and maintenance components using depreciation as a proxy — the standard technique investors use when companies don't disclose.
What this tool does
This tool splits your total capital expenditure into two components: maintenance capex and growth capex. Maintenance capex is estimated using depreciation as a proxy for the spending needed to keep existing assets operational, while growth capex represents the remainder available for expansion or new capacity. The calculation treats maintenance capex as the lower of depreciation or total capex, with growth capex as whatever remains above that threshold. This split helps illustrate how much of your capex budget flows toward sustaining current operations versus funding expansion. The result assumes depreciation reasonably reflects maintenance spending needs—actual maintenance costs may vary depending on asset age, condition, and operational intensity. Use this to model different capex allocation scenarios across planning periods.
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Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Separating growth capex from maintenance capex reveals true free cash flow. Maintenance capex = depreciation (replacing worn assets to keep status quo). Growth capex = total capex minus depreciation (expanding capacity). Only growth capex creates new value; maintenance is cost of running the existing business.
5M total capex, 3M depreciation. Maintenance capex = 3M (replacing what wore out). Growth capex = 2M (new capacity). Investors value growth capex positively (building future revenue) and maintenance negatively (ongoing cost). Reported capex doesn't distinguish - this split is essential for valuation.
Buffett's 'owner earnings' concept: true earnings = net income + depreciation - maintenance capex. If capex = depreciation, owner earnings = net income. If capex > depreciation, the extra is growth investment (reduce owner earnings for true maintenance-adjusted profitability). Many capital-intensive businesses show high earnings but high maintenance capex, making owner earnings much lower than net income.
Quick example
With total capex of 5,000,000 and depreciation of 3,000,000, the result is 2,000,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter Total Capex and Depreciation. The rate and the time horizon usually dominate — compounding means a small change in either reshapes the final figure more than a similar shift in contribution size. Test this by doubling one input at a time.
What's happening under the hood
Maintenance capex = min(depreciation, total capex). Growth capex = max(0, total - depreciation). The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
What to do with a low result
A disappointing result is information, not a judgement. Pick the single input that dragged the figure down most and focus the next quarter on that one factor. Breadth-first improvement rarely works; depth-first on the worst input usually does.
What this doesn't capture
The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.
££5,000,000 total - ££3,000,000 maintenance = 2,000,000.00 growth.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
The calculator divides total capital expenditure into two components: maintenance capex and growth capex. Maintenance capex is computed as the minimum of total capex and depreciation, representing spending required to sustain existing asset capacity. Growth capex is then calculated as the remainder, computed by subtracting depreciation from total capex, floored at zero to prevent negative values. This model assumes depreciation serves as a reliable proxy for the investment needed to maintain asset base functionality. The calculation treats all capex as either maintenance-focused or growth-focused with no overlap, and does not account for timing differences between depreciation recognition and actual cash outflows, variations in asset lifecycle patterns, or strategic capex decisions that may not align with depreciation schedules.
References
Frequently Asked Questions
Why use depreciation as proxy?
When is this proxy wrong?
Why investors care?
Buffett's owner earnings?
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