Get Active in Our Amazing Community of Over 448,000 Peers!

Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Case Partners to connect and practice with!

What's the difference btw opex, capex and fixed costs?

capex casepartnerswanted fixed costs opex
New answer on Sep 05, 2019
1 Answer
2.6 k Views
Anonymous A asked on Sep 05, 2019

Thanks!

Overview of answers

Upvotes
  • Upvotes
  • Date ascending
  • Date descending
Best answer
Artur R.
Skilled
replied on Sep 05, 2019

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).Difference variable fixed costs

Was this answer helpful?
5
How likely are you to recommend us to a friend or fellow student?
0
1
2
3
4
5
6
7
8
9
10
0 = Not likely
10 = Very likely