Case Study on Capital Expenditures (MCX)

Here’s to our wives and girlfriends… may they never meet! –Groucho Marx

MCX and Iridium Case Study

Our first discussion of Maintenance Capital Expenditures (“MCX”) occurred here:

One method of learning is to EXHAUSTIVELY analyze and read about a subject so we can master the topic and understand the principles and subtleties in applying those principles.

We are focused on Return on Invested Capital which has been defined one way as Operating Earnings (Earnings before Interest Expense and Taxes, EBIT) or better yet, (Earnings before Interest Expense, Taxes and Depreciation & Amortization, “EBITDA” – MCX) divided by tangible capital or (Net Working Capital + Net Property, Plant and Equipment). We have covered EBITDA thoroughly in a 36 page discussion here:

Now we review MCX as part of the (EBITDA – MCX) calculation.

The link below has a PDF that further analyzes how to calculate one aspect of Return on Invested Capital–(EBITDA – MCX) divided by Tangible Capital.

Also, this case study will be placed in the VALUE VAULT

The Bridge of Death

If you do not master the above case study then as investors you will not be able to cross the Bridge of Death:

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