Capital Expenditures

How to use

The Standard Financial Model and Runway Tool share a core component on the Forecast sheet that handles capital expenditures and straight-line depreciation.

On Forecast, any line assigned to CAPEX is summed into total new CAPEX for that period. The depreciation period comes from Depreciation, straight-line for N months on Get Started.

How it works

Depreciation, straight-line for N months sets the period over which CAPEX depreciates. Straight-line = CAPEX / number of periods.

For accelerated or varied depreciation schedules across different assets, extend the depreciation section on Forecast and link new rows into the core revenue and expense lines using the depreciation category.

CAPEX reports in Cash Flows from Investing in the period of the expense (not the Income Statement). Accumulated CAPEX is typically reported as Property, Plant, and Equipment (PPE). Depreciation reports under other income and expense, and accumulated depreciation sits alongside PPE on the balance sheet.

CAPEX increases PPE. Depreciation reduces PPE.

PPE on the balance sheet shows up in two common forms:

• Three lines — PPE (cumulative CAPEX), Accumulated Depreciation, Total PPE (the sum).
• One line — Net PPE.

The Forecast sheet calculates per period:

• Property, Plant and Equipment, net, beginning of period — accumulated CAPEX + depreciation
• New Capital Expenditures (CAPEX) — CAPEX this period
• Depreciation — from the Get Started assumption, straight-line
• Depreciation (manual) — any additional depreciation lines from the expense section, for custom schedules
• Property, Plant and Equipment, net, end of period

Also tracked:

• Accumulated Capital Expenditures — total CAPEX to date
• Accumulated Depreciation — total depreciation to date
• Value of Newly Fully Depreciated Assets — assets reaching full depreciation this period
• Capital Expenditure Depreciation Basis — accumulated CAPEX less fully-depreciated assets at time of full depreciation. Used in the depreciation calculation.

A cohort-based structure would allow different schedules per acquisition period, but this model uses a simpler approach for efficiency.

Entering depreciation manually

To skip the prebuilt schedule, enter depreciation in the core expense section on Forecast via drivers, manual input, or custom calculations linked in from elsewhere. Useful for accelerated methods or per-asset schedules.

Background

Capital expenditures (CAPEX) are funds used to acquire, upgrade, or maintain physical assets — property, buildings, equipment. They're capitalized on the balance sheet rather than expensed on the income statement. Two common categories:

• Growth CAPEX — expansion of future capacity.
• Maintenance CAPEX — preserves existing cash flow generation.

Depreciation allocates the cost of a tangible asset across its useful life, matching expense to revenue. It reduces net income on the income statement and accumulated depreciation on the balance sheet, but is non-cash — it gets added back in cash flow from operations.

Common depreciation methods: straight-line, declining balance, units of production, sum-of-years'-digits. Each fits different usage patterns. Straight-line is what this model uses by default.