Meaning and classification
Maintenance capital expenditure is investment that an analyst associates with preserving a business’s operating condition and current production capacity. It is not necessarily a separate line in the financial statements. One project can both replace a worn-out asset and expand capabilities, so the boundary between maintenance and growth requires a method. The cash estimate should reflect actual investment needs.[94](#source-cv-cashflows)
If hypothetical capital expenditure is 35 million roubles, the entire amount cannot automatically be called expansion and excluded from the recurring cash flow. Information about equipment replacement, the condition of capacity and the nature of projects is needed. When no breakdown is available, it is useful to show several scenarios.
Limits of the measure
Maintenance investment does not have to equal depreciation: depreciation is an accounting allocation of cost, not a budget for a future replacement. A saving in one year may reflect postponed work. The measure helps assess cash capital intensity, but it is not a universally observable quantity and does not justify treating EBITDA as owners’ free cash. Related reading: [market capitalization and multiples](/guides/market-cap-and-multiples/) and [inventory and depreciation](/guides/inventory-and-depreciation/).