How to calculate the Capex/Opex

One of the most difficult jobs is calculating a major company's overall expenses based on daily and monthly activities. Keeping manual records of every single cost and ensuring precise calculation is a major burden nowadays.

ERP provides an excellent solution for avoiding this hassle by using automated technology which is called Capex and Opex. Capex and Opex stands for consistently Capital Expenditures and Operating expenses. Capex calculates the major and long term expenses where Opex calculate the day to day expenses of a company. The majority of businesses are now considering how to simply compute Capex and Opex. The most efficient technique to compute these two terms in a short amount of time is to use ERP.

The procedure of calculating Capex and Opex with ERP is described in this article.

Steps of calculating Capex-

Proper Financial Statements- Financial statements over the last two years have to be properly organized first. These statements demonstrate the importance of accurate calculations through ERP.

Subtract the Fixed Asset- To discover changes in the fixed asset, ERP deduct the most current year’s fixed asset from the previous year's fixed asset.

Subtract Accumulated Depreciation- ERP subtract the previous year’s accumulated depreciation from the recent year’s accumulated depreciation which gives you the present year’s total depreciation.

Add Total Depreciation- Now ERP adds the calculated depreciation with the changes of fixed assets which find out from step two.

The utmost formula is, Capex(capital expenditures)= (Current fixed asset-previous fixed asset)+(current accumulated depreciation-previous accumulated depreciation)

Here, ERP keeps each and every individual asset and accumulated depreciation of every single day of your company. ERP provides precise Capex calculation utilizing automated technology in a short period of time instead of human computation using this particular data/values.

Steps of calculating Opex-

Determine the Salaries and Wages- ERP enables your company to estimate yearly or monthly salaries and wages of every employee using a single software. It will provide the total summation of distributed salaries & wages.

Rent and Utilities Expenses- ERP helps to analyze the total rent and utility bills for the year based on each individual expenses.

Repair and Maintenance Expenses- Cost of predictive, preventive & corrective maintenance with unexpected accidental maintenance and repair will be documented on ERP.

Insurance and Travel Expenses- Employee’s insurance for emergency situations or unexpected accidents and travel for any company related meeting or tours will be considered as yearly insurance and travels expenses on ERP.

Supplies and Other Expenses- ERP evaluates all of a company’s supply and other costs, from the smallest to largest.

Now, the formula is to figure out the summation of all of these mentioned costs as Opex.

Opex(operating expenses)= Salaries and Wages + Rent and Utilities Expenses + Repair and Maintenance Expenses + Insurance and Travel Expenses + Supplies and Other Expenses.

Though ERP contains every particular cost of operation of a company, it takes a few minutes to figure out the summation of total yearly cost as Opex(operating cost).

A good understanding of your company’s Capex and Opex will support the analysis of annual profit or loss with a comprehensive report. It assists a company to take the next steps. Companies frequently appreciate Capex and Opex from the perspective of Income tax.