Thanks!
Thanks!
What's the difference btw opex, capex and fixed costs?
1 answer
CAPEX = Capital Expenditures - expenditures aimed, for example, at obtaining Fixed Assets (investments in building assets which willl be used as core for operations)
OPEX = Operational Expenditures - expenditures aimed to sustain company operations (example: raw materials, electricity, insuranse, taxes, rents, payrolls etc.)
Fixed costs are different dimension, for example:
Rent of your office cost 1000$/year (which is OPEX - because sustain entity operations), but called FIXED, because independent of entity activity (doesn't matter how much company sold - it will still pay 1000$/year). If we produce 100 or 1000 cans of Coke - office rent will not change.
In opposite to FC, we have:
Variable Costs, for example:
- raw materials to produce company products, or provide services: they are inline with business activity. If we produce 100 we will pay 1$ per can of raw materials, -> then cost will be equal to 100$. But if we produce 1000 -> we will pay 1000$. Thus - those are VARIABLE.
... however, in long-term -> Fixed Costs considered Variable (or semi-variable!),which just means that office cost will be increased to 1200$ in 5 years (to compensate inflation).
Related BootCamp article(s)
Economies of Scale and Scope
Use the concept of economies of scale and economies of scope to uncover potential areas for growth and profitability improvement in your consulting Case Interview
Fixed & Variable costs
Costs are segmented into fixed and variable costs, since these differ significantly with respect to dependency on activity and time-wise adaptability.
QuizRelated case(s)
The municipal utility Hamburg Energized is a local energy retail (power and gas) and distribution grid company active in the city of Hamburg. The majority of shares of Hamburg Energized is held by the city itself. As the distribution system operator of Hamburg, Hamburg Energized is responsible for t ... Open whole case
Our client is Unified Health, a health care company in the US. It insures patients and provides health care services. Employers pay a premium to UH for their employees and UH covers all necessary medical costs. UH has 300,000 patients enrolled. It has 300 salaried physicians covering 6 health center ... Open whole case
Our client, Central hospital, is a 350-bed hospital based in a medium-sized city. The company has normally seen strong financial results with a 1-4% operating gain each year for the last five years. However, this year they are projecting a $14 m operating loss and the situation is expected to worsen ... Open whole case
Problem definition: Our client is Korean Car Parts (KCP), a multi-national original equipment manufacturer (OEM) of car parts based in Korea. They've recently seen a decline in profits and have brought us in to understand how to address this falling profitability. Open whole case
Sky China, a government-backed Chinese airline, has recently seen profits plummet due to COVID-19. Profits are down 80% in the months of February and March, but are showing early signs of a rebound in April. They've brought you in to first investigate what can be done immediatedly to prevent hemor ... Open whole case
