manuelbean Posted May 25, 2020 Share Posted May 25, 2020 Hi guys, Why exactly is it assumed that the Maintenance CAPEX will roughly equal the D&A expense? *This question is linked to another one I've posted about ROIC, but given that there might be other investors with the same doubt, I thought that creating a new thread would be a good idea. Let's picture a company with 1 asset. A house that was bought by $1M. Let's say that the company depreciates the house in 25 years to zero and it won't replace it after that period. If the maintenance CAPEX equals the depreciation charge, it means that after 25 years the company has spent $2M on that house, right? Why is this so? Why should it match? I know that finding the Maintenance CAPEX is a long time quest for several investors and I don't want to overcomplicate. I just want to understand the reason people use the D&A as a proxy. Thank you Link to comment Share on other sites More sharing options...
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