Capex to PPE

Capex on PPE  = Capital Expenditure (Capex) / Property, Plant and Equipment (PPE)

 

How capital intensive

This ratio shows you how capital intensive a company is.

The higher the value of the Capex on PPE ratio the more capital intensive the company is.

Companies with an increasing (from year to year) ratio may be moving to be more capital intensive and studies have shown that they underperform the market.

Higher Capex also means lower Free Cash Flow (Operating cash flow – Capex) generation and perhaps lower dividends as companies don’t have the cash to pay dividends if they are investing more in the business.

 

How to use the ratio

Available as a screening ratio: Yes

Available as an output column ratio: Yes

 

How to select the companies with low capital intensity (a low Capex on PPE value)

To find companies with low capital intensity set the slider from 90% to 100%.

 

More information

You can read more about all the red flag ratios in the screener here: Ignore these red flag ratios if you want lower returns

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