Growth Capex vs Maintenance Capex

Maintenance capital expenditures refer to the funds a company allocates to maintain or replace its existing assets, such as equipment, property, and infrastructure. The purpose of maintenance capital expenditures is to keep the existing assets in good working condition, and to ensure that they continue to generate revenue for the company.

On the other hand, growth capital expenditures refer to the funds a company allocates to acquire new assets or to expand its existing assets. The purpose of growth capital expenditures is to increase the company's capacity to generate revenue, by increasing production, expanding into new markets, or acquiring other companies.

In summary, maintenance capital expenditures are made to keep the existing assets in good working condition, while growth capital expenditures are made to acquire new assets or expand the existing ones. Maintenance capital expenditures are considered as necessary to sustain the current level of operations, while growth capital expenditures are considered as investments to drive growth and expansion.