Glossary
Maintenance capex
What must be spent on equipment just to keep the business running at its current level. The cost that EBITDA pretends does not exist.
In plain English
Maintenance capital expenditure is the recurring spend needed to keep existing capacity working: replacing the ute at 250,000km, the ovens every eight years, the fit-out before the landlord insists. It is distinct from growth capex, which buys new capacity rather than preserving what exists.
Because EBITDA excludes depreciation, it silently excludes this cost too. A business showing $300,000 of EBITDA with $80,000 of true annual maintenance capex generates $220,000 of cash before financing, and pricing or borrowing against the bigger number is how buyers overpay and overborrow at the same time.
Why a lender cares
Experienced assessors deduct realistic maintenance capex before testing serviceability, especially in equipment-heavy trades. A file that has already done so, from the asset register and the actual replacement history, reads as honest and survives the credit team's own version of the same exercise. It is a standard line in our detailed engagements.
Where this term takes you
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