CAPEX/Sales Ratio is a measure of company’s investment intensity. It is calculated as CAPEX divided by Sales.
This ratio shows how many dollars of CAPEX company makes per each dollar of its’ Sales.
Generally, the lower the ratio the better. That is because CAPEX is a long term investment which will not bring immediate returns. But lack of CAPEX can undermine company’s ability to operate properly and thus may have negative effect.
CAPEX/Sales ratio vary across industries, because some industries are very capital intensive and some not.
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