Sustaining capital refers to the ongoing (yearly) capital investment that a refinery must make to continue to operate. This includes maintenance capital and investment required to adapt to regulatory changes. It does not include investment for expansion or margin improvement (growth capital).
What is sustained CapEx?
Sustaining capex refers only to capital expenditures necessary to maintain capacity at existing levels.
How do you project maintenance CapEx?
Maintenance capital expenditure = depreciation and amortization
- Calculate the average gross property, plant, and equipment(PPE)/sales ratio over five years.
- Calculate the current year’s increase in sales.
- Multiply PPE/Sales ratio by an increase in sales to arrive at growth CapEx.
What is annual sustaining capital reinvestment?
Sustaining capital reinvestment is the periodic addition of capital to the business that is required to maintain operations at existing levels. Sustaining capital reinvestment is sometimes called maintenance capex.
What is growth capex?
Growth capex is the capital expenditure undertaken by an organization to further its growth prospects and/or expand its existing operations. This investment made by the organization is used to attract new customers, develop new business segments or to increase the capacity for a larger business.
What is non sustaining capex?
Non-Sustaining Capital Expenditures means all capital expenditures made or to be made other than Sustaining Capital Expenditures.
What is maintenance capex?
Maintenance CapEx refers to CapEx that is necessary for the company to continue operating in its current form. Growth CapEx is expenditure on new assets that are intended to grow the company’s productive capacity.
What is maintenance CapEx?
How do you calculate future CapEx?
How to calculate capital expenditures
- Obtain your company’s financial statements. To calculate capital expenditures, you’ll need your company’s financial documents for the past two years.
- Subtract the fixed assets.
- Subtract the accumulated depreciation.
- Add total depreciation.
Do you depreciate maintenance capex?
Most companies do not breakdown growth vs maintenance capital expenditures in their annual or quarterly reports. Depreciation is assumed to be maintenance capex, the remaining balance is assumed to be growth capex (Growth Capex = Total Capex less Depreciation).
What is internal CapEx?
These are the expenses/investments in additional assets to help facilitate growth. Internally Financed Capital Expenditures: Spending internal cash (instead of debt) to pay for capex. Internally financed capex is part of the fixed charge coverage ratio (FCCR) used to determine a company’s ability to repay its debt.
What are sustaining costs?
WGC guideline classifies as sustaining cost all the costs necessary to maintain the current assets production capacity and carry out the current production plan. It also includes costs that help maintain the company social license not related to current production.
What is sustaining capital?
Sustaining capital refers to the ongoing (yearly) capital investment that a refinery must make to continue to operate. This includes maintenance capital and investment required to adapt to regulatory changes.
What is sustained capital in a refinery?
Sustaining capital. Sustaining capital refers to the ongoing (yearly) capital investment that a refinery must make to continue to operate. This includes maintenance capital and investment required to adapt to regulatory changes.
How to determine the appropriate level of sustaining capital reinvestment?
An important issue to consider is the determination of an appropriate level of sustaining capital reinvestment required to maintain a company’s current operations and profitability. This determination is usually based on analysis of historical levels of capital expenditure.
