Frequently Asked Questions
Capital Intensity refers to the amount of capital a company must invest in equipment or facilities to maintain operations and stay competitive. High levels of capital intensity can have a negative impact over the long term, as those costs may have to be fuelled by debt.
Vuru assesses a company's capital intensity by looking at the size of their Capital Expenditure Ratio. This is the proportion of Net Income that is spent on Capital Expenditures. Lower is better in this case, as it means a company has to spend less to stay competitive.
Capital Expenditure Ratio = Capital Expenditure / Net Income x 100%