Capex Versus Depreciation

This problem practices a core financial statement analysis concept, the relationship between capex and depreciation across a company’s life cycle. Candidates need to understand how investment spending today flows through future income statements through depreciation, and how that pattern changes when a business shifts from expansion mode to a more stable, maintenance focused phase. Interviewers ask this because it tests whether you can connect the cash flow statement, balance sheet, and income statement, and whether you understand the difference between growth spending and ongoing replacement spending.