What is Capex/Rev?
The percentage of revenue that a company invests back into capital expenditures for property, plant, and equipment.
Think of it like this
Like a restaurant reinvesting a portion of its sales into new ovens and kitchen equipment to stay competitive.
Formula
Capex/Revenue = Capital Expenditures ÷ Revenue × 100- Capital Expenditures: Money spent on fixed assets like buildings, equipment
- Revenue: Total sales income
Why it matters
- Shows how capital-intensive the business is
- High ratio may indicate growth investments
- Low ratio may mean mature business or asset-light model
- Affects free cash flow generation
What's a good value?
< 3%
Asset-Light
Software, services companies
3-8%
Moderate
Most consumer companies
8-15%
Capital Intensive
Manufacturing, retail
> 15%
Heavy Investment
Utilities, telecom, heavy industry
Real-world example
Tech companies like Meta spend 15%+ on data centers, while software companies spend under 3%.
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