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Step 17: Plan for a Capital Expenditure

Trigger the purchase of new computers based on your hiring plan

To ensure that the full cost of bringing on new staff is captured, drivers can be used to model additional costs associated with each new hire, such as a new computer.

This is done by defining the properties of the capital asset and then configuring a driver to trigger the purchase of that asset.

The result of this configuration will produce the following results:

  • The Fixed Asset account on the Balance Sheet will incrementally increase
  • Depreciation Schedule will be calculated for the asset and drive the periodic Depreciation expense on the Income Statement and the Accumulated Depreciation on the Balance Sheet
  • The Cash Flow Statement will reflect the cash going out for the expenditure 

To configure your model to purchase a new computer for each new hire, follow the steps below:

  1. Add the CapEx Asset & Define the Properties
    Go to Plans > Drivers > Locate CapEx Assets > ... > + Add Asset and input the properties.
    • Name: Reference field for the CapEx Driver in Step 2
    • Asset & Asset Contra Account: Fixed Asset & Accumulated Depreciation Balance Sheet accounts
    • Expense Account & Department: Periodic Deprecation Income Statement account & department 
    • Amort Period: Useful life
    • Asset Cost: Purchase price 
  2. Add a CapEx Driver 
    From Plans > Drivers > Locate CapEx > ... > + Add Asset and populate the Driver.
    • Name: New Hire Computers
    • Asset: Name of CapEx Asset from Step 1
    • Output Type: Incremental
    • Driver: Headcount New # from Staffing model for all roles & departments 
    • All other fields can remain with default settings 


​This will trigger a new computer to automatically be added to the plan for each new employee per the staffing plan. In the example below, we can see we have a new hire planned for June 2021 and the corresponding impact on cash.

​Continue to Step 18: Plan for Accounts Receivable & Accounts Payable

 

Additional Resource: CapEx Module Documentation