StoxBox
Login

CAPEX Understanding Capital Expenditure with examples

  1. Stock Markets Basic
    1. Invest:3 benefits of investing for your future
    2. Types of Investment Diversification asset classes
    3. What is the share market? What Does It Do and How Does It Work with examples
    4. SEBI What is Securities and Exchange Board of India
    5. Stock Broker Financial Intermediaries or Market Intermediaries role in share market
    6. Depository and types of Depository Participants in India
    7. ICCL, NSE Clearing Limited and Bank’s role as Financial intermediary
    8. Angel Investors What are their roles with examples
    9. Venture Capitalist Who Are They and What Do They Do
    10. CAPEX Understanding Capital Expenditure with examples
    11. Private Equity Explained Understanding PE With Examples
    12. Initial Public Offering (IPO): What It Is and How It Works
    13. Launch IPO Why Do Companies Go Public
    14. IPO process how Initial Public Offering works in India
    15. What is IPO Key Terms Related to Initial Public Offering
    16. What is the share market?
    17. Share price understanding how does prices increase or decrease with examples
    18. Share trading: How Does It Work? with examples
    19. Types of traders in share market
    20. Market Index How Indexing Works, Types, and Examples in share market
    21. Share market indices importance and key terms
    22. Index construction methodology
    23. Share market terminology
    24. Share market terminology for beginners
    25. How to Trade Shares for Beginners
    26. Clearing and settlement process in the Indian Share market
    27. Stock selling learn What happens when you sell a stock
    28. Corporate actions in share market and impact on prices
    29. Bonus Issue of Shares Explained and How They Work
    30. Stock Split and Buyback of Shares What you need to know
    31. Monetary Policy by RBI Repo Rate, reverse repo rate, Cash reserve
    32. Inflation and IIP explained with examples
    33. Purchasing Managers Index, Budget, Corporate Earnings Announcement and Non-Financial events
    34. Stock market basics for beginners
    35. Offer for Sale and Follow-on Public Offer explained with examples
    36. Rights Issue and its relevance to shareholders explained with examples
Previous lesson Next lesson
Marketopedia / Stock Markets Basic / CAPEX Understanding Capital Expenditure with examples

Part 3- Banker

Three years down the line, the company has achieved great success.It decides to open up retail stores in at least three cities, accompanied by an increase in production as well as hiring of additional resources. Whenever an enterprise plans such expenditure it is termed as ‘Capital Expenditure’ or commonly known as ‘CAPEX’.

The management has estimated an amount of 30 Crs to cater to their CAPEX needs. It remains unclear how the company will be able to come up with this sum.

The company has a few ways to raise the funds for their CAPEX: 

  1. The company has made some gains in recent years; a portion of the CAPEX need can be covered through these profits, otherwise known as funding through internal accruals.
  2. The company could reach out to another venture capitalist, offering up shares of the company as part of a subsequent round of funding, also known as series B.
  3. The company can go to a bank for a loan as they have been doing quite well lately. Banks will then provide a loan, also known as debt.

Assuming the company uses all three methods to acquire capital for Capex, it can draw on 5 Crs of internal accruals, invite a venture capitalist to invest 10 Crs in exchange for equity, and borrow 15 Crs from a bank.

The increase of 10 Crs from the Series B investment has seen a rise in the company’s valuation, bringing notional profits to current investors. It really emphasises the potential wealth investors can generate by believing in an entrepreneur’s vision and backing them with a competent management team.

Some practical examples of such wealth creation include Indian companies such as Infosys, Avenue Supermarts (D-Mart), Eicher Motors, Titan Industries, and Bajaj Finserve, as well as international companies like Google, Apple, Amazon, among others.

    captcha


    Marketopedia
    Stock Markets Basic
    Copy link
    Twitter Facebook Linkedin
    Previous lesson Next lesson
    StoxBox
    © 2021 BP Equities Pvt. Ltd.
    All Rights Reserved
    StoxBox Instagram
    StoxBox Facebook
    StoxBox Twitter
    StoxBox Youtube
    StoxBox Linkedin
    StoxBox Whatsapp
    Get the app
    StoxBox Footer
    StoxBox Google Play Store
    Products
    MentorBox
    HotBox
    More

    *All subscription pricing plans mentioned across the website are exclusive of 18% GST

    By signing up, you agree to receive transactional messages on WhatsApp. You may also receive a call from a BP Wealth representative to help you with the account opening process

    Disclosures and Disclaimer: Investment in securities markets are subject to market risks; please read all the related documents carefully before investing. The securities quoted are exemplary and are not recommendatory. Past performance is not indicative of future results. Details provided in the above newsletter are for educational purposes and should not be construed as investment advice by BP Equities Pvt. Ltd. Investors should consult their investment advisor before making any investment decision. BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), IN-DP-CDSL-183-2002 (CDSL), INH000000974 (Research Analyst), CIN: U45200MH1994PTC081564. Please ensure you carefully read the Risk Disclosure Document as prescribed by SEBI | ICF

    Attention Investors

    1. Stock Brokers can accept securities as margin from clients only by way of pledge in the depository system w.e.f. September 1, 2020.
    2. Update your mobile number & email Id with your stock broker/depository participant and receive OTP directly from depository on your email id and/or mobile number to create pledge.
    3. Pay 20% upfront margin of the transaction value to trade in cash market segment.
    4.  Investors may please refer to the Exchange’s Frequently Asked Questions (FAQs) issued vide circular reference NSE/INSP/45191 dated July 31, 2020 and NSE/INSP/45534 dated August 31, 2020 and other guidelines issued from time to time in this regard.
    5. Check your Securities /MF/ Bonds in the consolidated account statement issued by NSDL/CDSL every month.

    Issued in the interest of Investors

    Communications: When You use the Website or send emails or other data, information or communication to us, You agree and understand that You are communicating with Us through electronic records and You consent to receive communications via electronic records from Us periodically and as and when required. We may communicate with you by email or by such other mode of communication, electronic or otherwise.

    Investor Alert:

    1. Prevent Unauthorised Transactions in your demat account –> Update your Mobile Number with your Depository Participant. Receive alerts on your Registered Mobile for all debit and other important transactions in your demat account directly from CDSL on the same day………………….issued in the interest of investors.
    2. KYC is one time exercise while dealing in securities markets – once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
    3. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor’s account.

    BP Equities Pvt Ltd – SEBI Regn No: INZ000176539 (BSE/NSE), INZ000030431 (MCX/NCDEX), IN-DP-CDSL-183-2002 (CDSL),
    INH000000974 (Research Analyst) CIN: U45200MH1994PTC081564
    BP Comtrade Pvt Ltd – SEBI Regn No: INZ000030431 CIN: U45200MH1994PTC081564

    For complaints, send email on investor@bpwealth.com

    Copyrights © 2022 BP Group All Rights Reserved