Re:DigitalOcean raises $100M in debt as it scales toward rev...
by JumpCrisscross on Thursday February 20, 2020 @03:00PM
(#22378044)
> Depreciation is past capex, not future capex
Technically (from an accounting perspective), yes. Practically (from a financial/economic perspective), not quite.
Past capex is a sunk cost. Investors care about future cash flows. If you strip out depreciation, you’ll be surprised by the bill when your machine breaks down. (You may still be surprised. Life is unpredictable and depreciation schedules are an estimate. But that’s one of the problems the concept tries to solve.)
Technically (from an accounting perspective), yes. Practically (from a financial/economic perspective), not quite.
Past capex is a sunk cost. Investors care about future cash flows. If you strip out depreciation, you’ll be surprised by the bill when your machine breaks down. (You may still be surprised. Life is unpredictable and depreciation schedules are an estimate. But that’s one of the problems the concept tries to solve.)